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How long would your ‘Financial Safety Net' last?

5th March 2012 Print

Over 20 million Britons would be unable to maintain their current lifestyle after September 2012 if they had to live off any ‘emergency' funds, according to Bright Grey's Financial Safety Net report.

41% of adults say they would only be able to rely on savings, borrow from friends and family or rely on credit, for up to six months in a financial emergency. Worryingly, the number is five times greater than the figure for 2010.  Then, just four million adults said they would run out of money after six months.

Half (49%) of those surveyed believe they could rely on these types of support to survive financially for over a year.

Yet despite this, and the fact that more adults are getting into debt, the number with a financial protection product in place is also falling. Three in five (60%) have no cover whatsoever compared to 58% a year ago - whether that's life insurance, critical illness or income protection.

Roger Edwards, proposition director, Bright Grey, commented: "The fact that over a third of British adults believe they can't survive financially for longer than half a year even with support from friends, families, loans or available credit, shows just how concerned the nation is about its finances. We urge everyone to improve their own personal financial safety net, in preparation for any situation where the main breadwinner finds themselves unable to work. Having proper provisions in place means that you and your family can remain financially afloat for years, not months, should you or a loved one become disabled, seriously ill or die."

A typical adult in 2012 thinks they can use savings, loans or financial help from friends and family for an average of 290 days. This is a decrease of around one month from those that felt they could manage from savings and borrowing a year ago.

The study also showed that nearly half (43%) of respondents say they have £1,000 or less in savings that they could access immediately. Indeed, nearly a quarter (23%) have no money saved at all. The gender gap is still very much in evidence, with 45% of women having £1,000 or less in savings compared to 38% of men.

Should the main breadwinner be diagnosed with a serious illness, suffer a disability or die, one in four (24%) adults said that they would need to cut back drastically on their living costs in order to maintain their current standard of living. Rather worryingly, the same number (24%) said that they would not know what to do in this eventuality. Over one in ten (11%) of those surveyed said that they would have to sell their house.

Roger Edwards added: "It is important for men and women alike to consider their financial futures, as sadly there are many thousands of people who find themselves in a position where they are in urgent need of extra finance. With the EU gender directive due to come into force in December, the average cost of womens' protection in particular is set to rise, and people should take advantage of the current rates to ensure long term financial survival."