How long would your savings last if you couldn’t work?
The average worker’s savings would only support them for 32 days, according to a survey which found that only a quarter had enough spare cash set aside to see them through a single week if they stopped earning.
The survey* found the average employee had around £6,500 in savings.
But those questioned felt it would take another £10,000 on top of that for them to feel financially secure if their wages suddenly stopped. One in five had less than £500 in savings accounts.
Saving and preserving a pot of cash in savings or investment accounts is key to building wealth over time for when you really need it.
There are also steps people can take to protect their household from hardship if the main earner became too ill to work.
Our partner Wren Sterling, who provide money advice for every stage of life, say the solution can often be straightforward because of the range of cover on offer.
Financial adviser Barrie Storm said it can take as little as half an hour to start putting things in good order.
He said: “One of the first things we would expect is for people to gradually set aside between three and six months-worth of earnings as savings as a buffer. It’s a kind of financial convalescence if you can’t work for whatever reason.
“You should also look at what kind of contingency you get from your employer and note any other benefits and then see how that fits in with what you need to pay out for the mortgage, food shopping and any other regular payments you need to cover.
“Then rather than take out loans or dip into your life savings, it’s a case of working out what insurance you would need to cover the gap.”
And once your cover is in place it’s a good time to take stock of what you can save and when.
Experts like Barrie always recommend paying off debts – then building that handy contingency fund – as a basis to build on, before looking how to make your savings pot grow.
*The survey by Legal and General quizzed 2,000 people.
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