Young adults are more likely to have less than £1,000 saved to draw on for emergencies than any other group, according to a survey. The results indicate that the cost of living crisis means that people aged 18 to 24 find it harder to save money for a rainy day.
The survey by HSBC UK found that the average emergency fund balance is around £7,000. Just over 60% said they saved money this way.
Fourteen per cent of respondents confirmed they had a balance of £20,000 – but were more likely to be over 55. A quarter said their emergency fund had dwindled in the past year, with 43% citing the rising cost of living as the main cause.
Other reasons included having to pay an unexpected bill and repay a debt. The survey was conducted online between April 8 and April 11 among 2,105 adults.
The figures coincide with inflation reaching a 40-year high of 9% due to soaring energy and fuel bills amid the impact of war in Ukraine and as economies emerge from the pandemic. Additionally, data from the Office for National Statistics (ONS) revealed that regular wages excluding bonuses plunged 4.5% in April when factoring in consumer price index (CPI) inflation. ) – the biggest drop since records began in January 2001.
Chantelle Perkins, Senior Financial Wellness Consultant at HSBC UK, said: “Adding to an emergency fund is a key part of building financial resilience. While we know this isn’t always possible, we encourage savers to set aside enough to cover their monthly expenses for three to six months, so they have a reserve in case circumstances change.
“However, we understand how difficult it is to save in the face of rising costs. It is therefore essential that savers know what resources are available to help them manage their money. Budget calculators and features like our financial health score tool can provide valuable support to help people plan for their future. »