One in five households are just one payday away from financial disaster, new figures have revealed. And the pressure is starting to be felt by middle income families as the cost of living crisis continues.
Insurer Direct Line found that 20% of families would not be able to last a month without getting into difficulties if the main earner was unable to work - and a quarter have no savings at all. Even those who had money set aside were suffering, with almost a third of households saying they had stopped saving altogether and half of those with a savings pot saying they had stopped topping it up.
One in four households had no safety net whatsoever, with two thirds of those admitting they would face financial difficulties within a year if the main breadwinner was unable to work, according to This Is Money. Unsurprisingly, it is the most vulnerable who are at risk. Nine in ten of the lowest income households suffer poor or very poor financial resilience, according to Hargreaves Lansdown and Oxford Economics, because they spend the largest proportion of their earnings on the essentials such as food, fuel and energy.
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However, middle income earners are also beginning to feel the pressure with almost a third having poor or very poor financial resilience, according to Hargreaves Lansdown. The financial advice company said that while all just under a third of adults will have to cut back, spend savings or borrow more this year to make ends meet, that rises to 80% among lower earners.
Vincent Guadagnino of Direct Line life insurance, said: 'Millions of households would be in an incredibly vulnerable position if the main household earner was to find themselves out of employment, with the impact felt in an incredibly short amount of time. 'For many households the impact wouldn't be measured on months but just a few short weeks."
In November, 28% of adults said the could not afford to eat balanced meals and 11% reported being hungry in the previous month because they lacked enough money to buy food, according to The Resolution Foundation.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said: 'The worst of the squeeze may be over, but the pain of rising prices will endure throughout 2023, and for lower earners, young people and singletons, it's going to be agonising. The past six months has taken a toll on our resilience across the board."
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