1 in 5 Brits have less than £1,000 in emergency savings

Millions of households are financially prepared for unexpected expenses, new research has found.

According to AJ Bell, nearly one in five (19%) British adults have less than £1,000 put aside for emergencies.

Perhaps unsurprisingly, older people were found to typically have more saved up.

In fact, 21% of over-55s were found to have at least £20,000 in an emergency cash pot.

But young people are lagging far behind, with 37% of 18 to 34-year-olds having less than £2,000 put aside.

Laura Suter, director of personal finance at AJ Bell, acknowledged that many older people will “have slowly built up a substantial cash buffer over the years”.

However, she said this “doesn’t address the problem of many young people leaving themselves exposed if they lose a job or face another financial emergency”.

Women have less money saved up

Women were also found to be likely to have relatively little put aside for emergencies.

Nearly one in four (24%) women have £1,000 or less saved, compared with 15% of men.

And as AJ Bell notes, there are “no signs of the gender savings gap slowing - in fact, it’s risen”.

“The end of the year is a time where we think more about spending than saving,” Ms Suter commented.

“But lots of people are leaving themselves financially exposed by not having enough in their cash savings.”

Why you need a rainy-day fund

Unexpected expenses, such as an emergency trip to the dentist or your boiler breaking down, are usually expensive.

So if you’re on a tight budget, even small financial shocks can have a big impact.

That’s why it’s so important to have a rainy-day fund, so you can cover these costs without having to borrow money or dip into savings.

A good goal is to have enough saved to cover around three months of your living costs - things like rent, bills, food and transport. 

We’ve put together some tips on how to build up a rainy-day fund to help you get started.

Even putting away a small amount regularly could make a big difference if or when you ever need it.

What if I can’t afford to put money aside?

If you’re already feeling stretched to the limit, then putting money into savings might not feel like an option. 
 
But help is out there. 
 
We’re here to listen to you without judgement, understand you and improve your financial wellbeing, whether that’s through:

• helping you budget
• letting you know what benefits you’re entitled to
• recommending debt solutions