Six in 10 ‘Middle Britain’ families do not have enough money in savings to get by if unemployment or ill health caused them to lose their income.
The final instalment of LV=’s ‘Income Roulette’ report, which studied the debts, savings and protection of 9,000 people reveals a ‘squeezed middle’ where households’ financial security is not as strong as their earnings might suggest.
It found that three-quarters (75%) of Middle Britain, who are married with one or two children, with average annual [household or individual?] incomes of £35,000, struggle to save because their bills are too high. This compares to a national average of 56%.
It’s unsurprising that those tagged Middle Britain are worried about money. A third said that they would not be able to survive a financial crisis and 44% are concerned that they will never be able to save.
This group are also more likely than the average household to have a mortgage (63% versus 27%), more likely to have credit cards (41% v 26%), and more likely to have unsecured personal loans (20% v 9%).
As a result of this, 59% of those in Middle Britain do not have the three-month’s salary in savings which the Money Advice Service suggest households have to help them cope with financial shock. This is substantially higher than the national average of 37%.
The Money Advice Service reckons 12 million squeezed Brits fall into this category. They have good earnings and some money in savings, but not enough to see them through an extended period of ill health or unemployment.
‘Household incomes are stretched more than ever before’
Commenting on the findings, Justin Harper, head of protection at LV= says: “In theory, you’d assume families on average earnings or above would feel relatively financially secure, but our research reveals this is far from the truth. At a time when wage increases are failing to keep up with price increases, household incomes are stretched more than ever before, and families – with responsibilities like mortgage payments and dependants – are struggling to make ends meet.
“It shouldn’t be that way. Income protection products can provide a valuable financial safety net but too few of us have it. We’re calling on the government to help households better cope with financial shocks such as a loss of income, by tasking the new Single Financial Guidance Body with improving the UK’s financial resilience across the board, and in particular among working families. With a typical 40-year old couple facing a three-in-five chance of being unable to work for two months or more, this issue could be more real than people think.”