One in three (36%) people in the UK say they would be in financial arrears within a month if they were to lose their jobs tomorrow, according to new research by AA Financial Services. This figure rises to a staggering one in two (51%) amongst people who rent their homes.
The findings come at a time when the UK’s savings ratio remains at a near record low, according to the Office of National Statistics, with concerns that Brits are spending more than they earn. As the cost of Christmas is being felt this month, many households will be looking at finances for the year ahead.
Surveying a representative sample of 2,055 adults across the UK, the results found three in 10 respondents said they borrowed money to pay for the cost of Christmas. Of those that borrowed money, a fifth said they put more than half the cost on credit cards. Again, this rose amongst renters to a third (33%) who borrowed money to pay for Christmas.
The research also saw 36% of respondents had intentions to save more this year than in previous years. One in four (27%) say they will be cutting back on luxuries, and one in five (20%) plan to get rid of their credit cards.
Taking control of their debts, one in 12 (8%) said they would be consolidating their debts into a loan with manageable monthly repayments.
James Fairclough, Director of AA Financial Services, said: “It’s concerning that so many people in the UK would not be able to maintain their lifestyle and provide for their families beyond a month should their circumstances change suddenly. This safety net is an essential part of being able to plan and stay on top of finances, and is key to minimising any anxieties people may have about their future.”
“2020 could be the year, for the first time in over a decade, where national interest rates rise to a significant figure, giving swathes of people good reason to save more of their money. The importance of savings is put into focus when planning for the future – not just the next year or two, but beyond this into retirement. As life expectancy gradually rises, the focus on staying on top of debt today becomes sharper. Cutting back or using a loan to consolidate existing debts can be a great way to do this, and the start of a new decade is as good a time as any to do it.”