How UK households are building financial safety nets

Back in July we reported on how UK savers are putting money away for the positive, planned things in life, such as holidays, home improvements or retirement. But there are some of us that also like to be prepared for the unexpected, just in case.

As autumn sets in and winter looms around the corner, so does the possibility of bill rises, unforeseen repairs and other expenses.

A nation of savvy savers

Among the 2,000 adults that took part in our research, nine in 10 of those surveyed have some money saved whatever the reason, which indicates we’re a nation of savvy savers, prepared for the positive and negative that may come our way.

While 2 in 5 saved for “sunny days”, 3 in 5 put money away to cover unplanned things including:

• home repairs
• sudden bill rises
• car repairs
• family emergencies
• medical or healthcare emergencies
• job loss/reduced income
• unexpected pet costs

In other words, for many of us, savings are there to keep life’s little (and not so little) dramas from turning into crises.

Covering the unexpected

The “emergency” with the highest average cost was job loss or reduced income, at £373.10, followed by family emergencies (£355.30), unplanned medical or healthcare emergencies affecting family members (£329.80), unplanned home repairs (£315.90), and emergency or unexpected legal fees (£306.40).

Note: this figure represents the average immediate cost people faced as a result of each type of emergency, rather than the total impact. For example, the £373.10 linked to job loss reflects the short term expenses people typically needed to cover, such as bills or essentials, while looking for new work.

Three in five (63%) people relied on their savings to cover such costs, rising to 76% among Boomers but falling to 54% for Gen Z. Other ways to afford these expenses include:

• adjusting income or budgeting
• stopping or reducing regular savings
• borrowing from friends or family
• using a buy now, pay later provider
• selling personal belongings
• borrowing from a bank or lender

What is holding us back from saving?

Almost 9 in 10 of those surveyed have some kind of nest egg, giving them peace of mind should the unexpected arise, but 3 in 10 are still finding it difficult to save regularly.

The main reasons for this include:

• a lack of disposable income
• other financial priorities taking over
• needing to use savings on an unexpected or challenging spending event
• not prioritising saving over spending
• not having a savings goal to work towards
• struggling to build the habit
• forgetting to save
• not liking to plan ahead

While most households have some savings, the amount or regularity can make a big difference. With 56% of our respondents saying their lack of savings made them feel anxious, what can we do to help us keep motivated to save?

Have a goal in mind – having a clear goal in mind (even if it’s just peace of mind to have funds to fall back on) will help you stay focused.

Be realistic – while the average amount we save is £408 per month, this may not be a realistic amount for everyone, so budget and set aside an amount that isn’t going to leave you short.

Plan early – things like retirement may seem ages away but the sooner you start to save, the bigger the difference it will make.

Start small – just £5 a month (the cost of a large coffee!) can add up, and you’ll benefit from compound interest. This is where the interest you earn over time is added to the principal sum of your account. Of course, the more you top up, the higher the compound interest will be, like a snowball effect. You can even open one of our Easy Access accounts with as little as £1.

Put your interest to work – you can choose to receive interest monthly on your savings, meaning this could help with the daily household payments.

Read more about ways to take control of your savings in our tips article or discover our range of products.