A survey from Solution Loans, a leading online finance broker has shown that 60% of people in the UK have less than £1,000 saved for emergencies such as a dishwasher or boiler breaking down. More worryingly, slightly over 10% of Brits have no savings of any kind for this this kind of scenario.
In the UK an average replacement boiler costs over one thousand pounds. Whilst this shouldn’t be a regular expense (boilers typically last around 15 years) anyone who’s moved into a house with an older boiler could be looking at having to replace it at short notice.
The study did however reveal that almost a quarter of Britons have over £5000 in savings to cover an emergency, enough to repair their roof if it came to it. However, this varied heavily across age groups with just 7.7% of those aged 18-24 with this level of savings whilst 37% of those aged 55 and over had this level of savings.
What can people do to help build up the kinds of savings required? Here are some simple tips:
- Make a budget each month and stick to it. Ensure that your outgoings don’t exceed your income. Save anything that’s left over
- Cut down on expenses as much as possible. Not drinking that coffee every day and taking a pact lunch to work are good ways to reduce costs. If possible, make saving into a game to make it more fun and keep it foremost in your mind.
- Live within your means by shopping smart. Bargain hunt and take advantage of two for one offers.
- Keep on top of credit cards and pay off as much as you can afford every month, ideally the full balance as this will prevent you from being charged.
Many people can fall into the trap of not saving sufficiently, and then borrowing money when problems do occur. Whilst borrowing can be a sensible way to manage finances, if a household is under pressure to make emergency repairs to an item then this can mean that the financial implications of borrowing aren’t thought through carefully.
Amanda Gillam from Solution Loans said: “Whilst saving isn’t always the most exciting thing a person can do with their money, its vital that if people can save that they put something aside for when times are hard. It’s important to consider the consequences of being caught out if something goes wrong at home and a household item needs to be replaced or repaired.
“Whilst borrowing money can help meet these short-term needs, in some cases unplanned borrowing can lead to people getting into financial difficulties over time. By simply putting away a small of money each month people can avoid these potential problems.”
