Not even £100

Take action, and take action now.

— Brian Tracy

I stumbled across an article today from The Independent, by mistake mind you, as I don’t read or watch the news. But a portion of the article shocked me. It said: “22 per cent of UK adults have less than £100 in savings, making them highly vulnerable to a financial shock such as losing their job or incurring unexpected bills.”

Wow! Not even £100 in savings. You could save 28p a day in a penny jar and have over £100 at the end of a year. Yet 22% of all UK adults don’t have that much money saved.

From a website, I got the following statistics. There are roughly 66 million people in the UK as of 2019. About 53 million people in the UK are adults.

Almost a quarter of all adults (22%), that’s 11 and a half million, don’t have even £100 in savings.

If all those people who don’t even have £100 in savings got up and moved to their own country, they’d be the 77th largest country in the world. Bigger than Belgium, Greece, Portugal, Hong Kong, Singapore, Denmark, Norway, New Zealand, the list goes on.

In the article it talks about these 22% are, “highly vulnerable to a financial shock such as losing their job or incurring unexpected bills.”

There is no way £100 in savings is going to ride the rough sea of losing their job. It won’t even cover a bill such as excess on car insurance if they have a prang. £100 will hardly deflect any type of emergency that comes up. It might deflect a hiccup, such as your only pair of shoes just fell to pieces, or you need a new passenger side tyre. But anything that is “emergency” size, such as losing your job, the boiler blowing up, or your car eventually dies. £100 won’t make a ripple in the ocean.

If you are in this situation, what should you do?

The first thing to do is don’t panic… There are over 11 million others floating around on driftwood in the ocean with you, so you’re not alone. But you need to immediately start looking for land to get some security. You can’t worry about the rest, you need to worry about you.

What you need to do is build an emergency fund… of a lot more than £100.

An emergency fund is a pot of money, that you can get your hands on immediately, such as going to the bank and withdrawing it. This pot of money is magic, as it stops you going into debt to pay off any emergency that arises. The problem for these 11 million adults is that if an emergency happens, they don’t have an emergency fund, they don’t even have £100. So they really only have a couple of options, all are not good.

Option 1, live with the emergency and save up. This might work if your car breaks down and you work close enough to walk, run or bike, but it doesn’t work if your boiler blows up and it’s the middle of winter.

Option 2, borrow off friends or family. This option is not good for relationships and should be avoided.

Option 3, borrow, either in the form of a loan, credit card, or any type of other lending such as the dreadful pay day loans. Option 3 is the worst option, as a £1,000 emergency ends up costing you a lot more when paying interest to the lender. Nope, there really is only one real option, and that’s build an emergency fund as quick as you can, before disaster strikes.

This will take time, patience and a drizzle of sacrifice.

The end goal is to get an emergency fund of at least 3 months of your expenses, but the preference is 6 months. Example: if you add up all your bills: gas, mortgage/rent, water, food, electricity, broadband, gym, etc, that figure will be your monthly figure: let’s say £1,000. You then need to save between £3,000 and £6,000. So for 6 months of expenses you need £6,000.

The odd thing is, once you get that emergency fund up and running and full of money, emergencies stop happening.

Conclusion

If you are one of the 11 and a half million that doesn’t have £100 in savings, I feel for you. But, no matter what’s going on in your life, it’s time to start making some changes and begin to build that emergency fund. You’ll feel mentally and physically better as you begin to save each month and see the fund building up. As your financial life improves, your health and well-being follows suit.

Author: The Pound Pence Team

We're Garry and Dave, and we're addicted to talking about money. We want to help as many people as possible become financially free by setting financial goals, getting out of debt, building an emergency fund, saving into their pension, buying their own property and investing for the long term over many decades. We don't do get rich quick, but we do get rich.

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