The emergency fund topic has been a hot potato for many years in financial planning circles.
So why do we have such a problem with saving? In the UK, the amount of savings per resident in 2020 came to £6,757.00. This is for all adult citizens living in the UK. One-third of the UK population have less than £600 in savings, with only 1 in 10 having no savings at all.
These figures are for 2020 and taken from data gathered by www.finder.com/uk/saving-statistics
So, what should you aim to build as a safety net? Should you fall on hard times? Well, the suggested figure is between 3 to 6 months income. If you take the average weekly income for the UK being £585, this will mean a savings pot should be accrued to the value of £7,020 for 3 months to £14,040 for 6 months. Compare this to the average saved per month of £105.43, and we can see that there is a substantial shortfall in our ability to safeguard our immediate needs and plan for our futures.
So how do we start to change these savings habits, and how should we invest the money?
Habits have not changed over the years; along with this, the same could be said for the everyday Bank/Building Society savings account. However, the move away from traditional savings has seen the likes of Monzo, Starling Bank come to market, with highly adaptable online apps that allow you to separate your pots and build savings for all sorts of reasons.
Add to these the introduction of trading platforms on mobile phones, such as eToro, Robinhood, Interactive Broker and MetaTrader 4. As a result, we have seen a substantial shift away and hopefully a potential for the younger generation to think about their financial future?
It is almost 30 years since I sat my first financial exams; even then, they taught us that every client should build an emergency fund before entering any other financial commitment. However, it can be viewed from the above statistics that nothing much has changed.
Planning for the immediate and future goals, we need commitment; it also requires a strategy. Here at Corestone, we have a simple 5-point plan that enables us to help guide you to a healthier financial future. The best part is, you don’t have to have them all, so even if you have already started your journey, why not contact us to see if we may be able to bridge those gaps.
Corestone, helping you with all your wealth decisions.