More than 16 million people are 'living on the edge' every day with no savings at all, according to new research.
The majority of UK homes (71%) experienced unforeseen bills at an average cost of £1,101 per household, the Money Advice Service survey revealed.
Nearly half of householders worry about how they will pay for unexpected bills, and this rises to two-thirds for those without any savings. A quarter of those surveyed said they would be forced to go into debt or increase their debt if they received an unexpected bill.
When it comes to lending money to loved ones, householders are prepared to get further into debt - the average loan is £2,482.
Car repairs or replacement accounted for an average of £1,341 of unexpected debt, while tax bills (£1,110), boiler repairs or replacement (£973) and legal bills (£839) were also in the top five most expensive unexpected costs.
No contingency plan
The survey highlights how many Brits have no contingency savings and the strain this puts on home life. Just over a third (34%) said unexpected bills had a "big impact" on their family's finances in 2013. The five most common unforeseen costs cited by the 2,024 Brits who took part in the survey were car repairs (29%), optician's bills (15%), technology breakdowns that urgently needed repair (15%), vets' bills (14%) and washing machine repairs or replacement (13%).
Although 27% of people said they could save money on a monthly basis, 39% said they haven't been able to put any savings aside during the past six months. More worrying, 37% of Brits said they have fewer savings now than last year, while this rises to 46% for those approaching retirement age (aged 55 to 64).
Caroline Rookes, chief executive of the Money Advice Service, said: "These results highlight the financial and emotional strain that just one unforeseen emergency bill can bring.
"With millions of homes experiencing unexpected costs of over a thousand pounds each year, it's vital people know how they might cope. We urge everyone to plan for 'rainy days' and build up a buffer to cover unforeseen costs.
"Even a small pot will help you cope with the shock of the unexpected and ease the strain. Setting a small amount gradually – such as £3 a day – will really pay off in the long term and provide peace of mind if you're hit by an emergency bill."