One million middle-income adults in UK have less than one month’s income saved
New research by the Institute for Fiscal Studies (IFS) has revealed a worrying trend among middle-income adults in the UK.
A shocking one million working-age adults on middle incomes – ie excluding the richest and poorest fifths of the population – have less than one month’s income saved in an accessible form, leaving them unprepared for unexpected financial outlays.
The median salary in Flintshire was £31,700 in 2022, the UK median salary was £33,000 in 2022.
The study has found that these adults report that they could not utilise their modest savings, borrow, or seek assistance from family or friends to meet an expense equalling one month’s income.
This suggests that large numbers are at significant risk of financial difficulty in the event of a drop in their income or an unanticipated expense.
The issue of low savings is not confined to low-income people. On the eve of the pandemic, a staggering 70% of the lowest-income tenth of the working-age population had less than £2,000 saved.
Yet, this issue extends to middle-income adults, where 43% had less than £2,000 saved.
Bee Boileau, a Research Economist at IFS and an author of the report, commented on the findings, “There are large numbers of middle-income working-age adults with little or nothing set aside for a rainy day.”
“Some might be able to borrow on credit cards, or from friends or family, but a million middle-income people would not be able to meet a significant unexpected expense.”
“With low levels of financial literacy associated with having few savings, one avenue for policy could be to work to boost financial literacy levels in the population.”
The research highlights the importance of savings in the event of financial upheaval, particularly in situations with less state support, such as self-employment.
Those with no savings were found to be significantly more likely to fall into arrears on household bills when faced with loss of work or furloughing.
Tom Wernham, a Research Economist at IFS and another author of the report, underlined this importance, stating, ‘Experiences during the pandemic show how important it is for people to have some savings. When bad financial shocks hit, those with some savings were much less likely to fall into financial difficulties than those with little or nothing set aside.’
As the UK grapples with the economic aftermath of the COVID-19 pandemic, this study sheds light on a precarious situation for a significant portion of the working population and underscores the urgency of boosting financial literacy and resilience among UK adults.”
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