Brits living on the edge

Almost one in four Brits (23%) have no savings set aside for a rainy day – and parents with young children are those most likely to be living on the edge – according to new research from Combined Insurance.

At a time when there is growing concern that interest rate hikes could leave homeowners struggling to service a debt mountain, Combined Insurance polled a GB representative sample of 2,300 people to establish how much emergency money Brits had and could quickly access for a rainy day.

23% of British adults claimed to have no savings whatsoever – and 8% claimed to have access to less than £100 – a mere 7% of one month’s pay cheque for the average worker.

Only one in four people (28%) claimed to have between £100 and £1,000 stashed away, well under the average month’s take home pay.

The findings also suggested that the rising cost of owning a home and raising children is beginning to take its toll. Alarmingly, more than one in three parents with children under the age of 7 (36%) say they have absolutely no savings for a rainy day. Furthermore, there are now more people in their 30s than their teens with no savings (28% versus 27%).

Parents with children (under the age of 7) are the group most likely to have no savings whatsoever (36%)

At a time when the Government is considering plans to vary the minimum wage across UK regions, the Combined Insurance study dispelled notions that Londoners are worst off, despite concerns over property, travel and living costs in the Capital. People in the North and South West were the group living most on the edge financially – i.e. those with no savings for a rainy day.

Proportion of people in each region that stated to have no savings at all.

South West 29%
North West 27%
North East 25%
Wales 24%
Yorkshire 22%
London 22%
Scotland 21%
Midlands 21%
South East 19%
East Anglia 19%

For millions of people, the absence of a financial safety net is a concern as it comes at a time when many Britons are finding life more expensive. Research over the last 12-months by Combined Insurance has highlighted the cost of living hikes that the public have been concerned about. Specifically:

After bills, debts and essential living costs were paid, the average Brit was left with just £27 each week to live on (May 2006).

Self-employed workers claimed to have the highest monthly commitments, standing at an average of £1,166 per month – compared with the national monthly average of £954 (July 2006).

More than one in two people (56%) claimed to have experienced at least one negative financial surprise during 2006.

Set against rising living costs, more than 90% of the nation’s workers were disappointed with the size of their annual bonus in 2006.

63% of people claimed to have been stung by increased utility bills during 2006

During 2006, the average homeowner claims to have experienced a 10 per cent increase in mortgage repayments and the cost of running a car increased by as much as 12 per cent

Nigel Brittle, Director at Combined Insurance commented: “Over the last two years, our community research has revealed that many Brits can see the cost of living going up, yet an alarming number have no savings at all. The longstanding rule of thumb that people should have three months salary in savings has gone out the window as many people are simply living from hand to mouth. The nation is living on the edge.”