1 in 3 people don’t have an emergency fund

Many British adults aren’t preparing for sudden, unexpected expenses.

According to research by Starling Bank, one in three people don’t have an emergency fund in place.

That means they’re having to dip into savings if they face an unexpected expense, such as car or house repairs or replacing a broken appliance.

This is particularly widespread among younger adults, as nearly half of 18 to 24-year-olds don’t have money set aside for sudden, unpredictable expenses.

Similarly, nearly four in ten 25 to 34-year-olds haven’t created an emergency fund.

How many people have dipped into their emergency fund - and why?

Nearly one in four people who have set up an emergency fund have accessed it to cover unexpected costs in the last year.

For example, one in five people said they’ve used their pot of money to cover the cost of car repairs, while a similar number used it for dental or medical bills.

But worryingly, nearly two-thirds are using their emergency fund for non-essential spending, such as holidays, clothes, shoes and takeaways.

This is especially widespread among under-25s who have an emergency fund in place.

Figures showed that 80% of people in this category use this money for discretionary spending, with some even using it to buy Taylor Swift and Oasis tickets.

Why should I have an emergency fund?

Being ready for the unexpected

Sudden expenses such as replacing a broken boiler rarely come at a convenient time. So it pays to be ready, so you don’t have to turn to credit cards or loans to cover the bill.

Peace of mind

Simply knowing that you have a safety net in place can make a huge psychological difference, so if you’re faced with an emergency expense, you can handle it with confidence rather than panic.

Staying on course to achieve your goals

If you don’t have to dip into your savings when you’re hit with a sudden, unexpected bill, you can be sure it won’t derail your efforts to reach your financial goals.

Avoiding debt

If you don’t have an emergency fund, it might be tempting to turn to high-interest credit cards, payday loans, or overdrafts to cover unexpected costs. So having a dedicated pot of money set aside can help you avoid going into debt during tough times.

Building better money habits

Building and maintaining an emergency fund encourages a sense of financial discipline, where you actively think about saving, staying on a steady financial footing and making sure nothing is left to chance.

If you’re unsure of how to manage your finances, then don’t despair.

We can help you with everything from budgeting to debt solutions, so you can build a solid financial foundation.

Our free advice is available online and over the phone.