How much money do you have in your savings account? How long would your head stay above water if you lost your main source of income?
These are important questions, particularly as the cost of living crisis bites, but several new studies have revealed that many people have a worryingly small amount of money saved up.
According to the Money and Pensions Service (MaPS), nine per cent of UK adults only have £100 or less in savings, while 17 per cent have nothing put away at all.
This backs up a separate study from the Building Societies Association (BSA), which found that 13 per cent of British adults don’t have any savings at all.
Figures also showed that rising inflation has prompted more than half to reduce the amount they used to save, while more than one in three have stopped saving completely.
At the same time, 36 per cent admitted they are relying on savings to get them through the cost of living crisis, while 33 per cent said they believe they wouldn’t have enough saved up to cover their living costs for a single month if they lost their income.
So where does all this leave us?
Too many of us simply don’t have enough money put away for the future and the rising cost of living means lots of people don’t feel able to put as much as they’d like into savings.
Furthermore, a huge number of people are relying on minimal savings to cope with soaring inflation, and don’t have enough saved up to get by should they lose their job.
Perhaps unsurprisingly, this situation has led to many people turning to credit, but this too can have damaging effects.
According to MaPS, 79 per cent of UK residents use credit, but of this number, more than two-fifths are feeling anxious about the amount they owe. Meanwhile, over a third admitted they feel worried about how many different lending products they have.
Financial stress can be devastating for a person’s mental health, so it’s really important that you take decisive action as soon as problems start to appear on the horizon.
The first step to take is to raise the alarm and seek help.
The MaPS survey revealed that more than eight in ten UK adults still avoid talking about their finances, with many admitting this is because they’re afraid of being judged, they feel ashamed or embarrassed, or are scared of burdening others.
But an uncomfortable conversation about your own financial situation will only be measured in hours, whereas the mental relief felt should bolster you up for months to come as you get help formulating a plan of action.
Services such as MoneyHelper are available free of charge and offer guidance on issues such as savings and debt.
You could also speak with a professional, regulated financial adviser, who can take a detailed look at your finances and suggest ways to make your money work harder for you.
They’ll work with you to create a bespoke financial plan, based around your specific needs, circumstances and priorities, so you can get the confidence and peace of mind you need to move forwards.
If you have any questions about how to manage your money, please don’t hesitate to get in touch with us and we’ll be happy to help.