The research indicated that saving for a rainy day remains a priority for more than six in ten GB adults, with 61% saying their have money put aside in an emergency fund.
Despite the current climate, nearly four in ten of those with an emergency fund (38%) have been topping it up and saw their balance increase in the last year, while one in four (25%) saw it reduce. Nearly three in ten (29%) said their balance has remained the same.
For those that have needed to dip into their ‘emergency fund’, meeting rising living costs was the leading reason, with 43% naming this as the reason for the withdrawal.
One in five (20%) said they withdrew money to cover an unexpected bill, while 16% said they’d seen their income reduce in the last year so needed to withdraw money to make up the difference. An additional 7% said they had used their emergency fund because they’d lost their income altogether.
Close to one in five (18%) used the funds for a one-off purchase. Just over one in ten people used the money to to book a holiday (11%), while 5% used their emergency fund as a deposit on a house, and 2% said they made a withdrawal to overpay on their mortgage. Six per cent of people used their emergency fund to pay off debts.
The average emergency fund balance was around £7,606 amongst those that had one. However, one in five (18%) had £1,000 or under in their savings pot.
Perhaps unsurprisingly, younger savers aged between 18 and 24 years old were the most likely to have a balance of £1,000 or less in their emergency fund (27%).
Conversely, 14% of respondents confirmed that they had a balance of £20,000 in their emergency fund, with the over 55s most likely to have a higher balance.
“Adding to an emergency fund is a key part of building financial resilience. While we know this is not always possible, we would encourage savers to put aside enough to cover their monthly outgoings for between three and six months, so that they have a buffer should their circumstances change.
“However, we appreciate how difficult it is to save in the face of rising costs so it’s key for savers to know what resources are available to help manage their money. Budget calculators and features such as our financial fitness score tool can provide valuable support in helping people plan for the future.
“Equally, it’s important for people to make sure their savings are working hard for them, particularly with the backdrop of significantly higher inflation. People who have more in their emergency fund than they’d need to cover six months’ costs should consider how they can maximise returns on their savings, and could consider things like tax efficient savings, like ISAs or possibly investing.”
Leila Taleb, HSBC UK Press Office: Leila.email@example.com
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Notes to editors:
Total sample size was 2105 adults. Fieldwork was undertaken between 8th - 11th April 2022. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
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