Brits admit being unprepared for financial emergencies

Millions of Britons are failing to put aside enough money to cover themselves for a financial emergency according to the latest research from Birmingham Midshires.

Birmingham Midshires asked 2,000 people which potential financial emergencies or surprise costs they would be able to afford should they need to meet these added costs. The findings show that the vast majority of Britons would be unable to cover a variety of unexpected costs in the short to medium term.

Long-term care

With many people ill-prepared to care for themselves, their loved ones may also struggle to cope with the costs of long term care. Ninety five per cent of those surveyed said that they would be crippled financially if they needed to support an elderly relative in old age.

The situation is worst for those in their early twenties, 97 per cent would struggle to care for their parents. The country least prepared for this eventuality is Wales where 96 per cent would be unable to cope financially with the cost of caring for an elder.

Baby Blues

More than eight in ten (86%) Britons could not afford the cost of having a child should they or their partner fall pregnant in 2007. Women are slightly less prepared than men for the financial implications of a child (89% compared to 83%).

As many as nine in ten (89%) young adults aged between 18 and 24 could not afford the cost of having a child. The North of England is the least prepared region, with 88 per cent of people admitting they would struggle to finance the arrival of new baby.

Unemployment

Eighty per cent of Britons would be financially unprepared if they were made redundant, even if unemployed for as little as three months. Those aged between 25 and 34 are most likely to struggle should their employer let them go, 85 per cent would be unable to meet the burden of running a household without a regular income.

Unemployment would hit hardest in London, with 82 per cent claiming they could not support their families in the short-term if they lost their jobs.

Jason Robinson, director of savings operations for Birmingham Midshires commented on the findings: “It is alarming that so many people could struggle if hit by a financial emergency or unforeseen cost. We are concerned about people’s liquid wealth – the money that should be available to them in a financial emergency. Much is talked about the need for saving for the long-term, but without an accessible savings pot set aside for that ‘rainy day’, short-term financial costs can leave families with severe difficulties.”

“By putting aside a small amount every month, it is possible to build an adequate nest egg which will safeguard people from those of life’s eventualities which are often guilty of pushing us into debt. We would recommend people have the equivalent of three months’ salary tucked away to use as a financial buffer should the need arise.”