One in five ‘living on financial precipice with no savings before lockdown’

One in five workers had no cash put aside for emergencies before the coronavirus lockdown started, a survey has found.

Some 21% had no emergency fund in place, with 25% of women saying this, compared with 17% of men, according to investments company AJ Bell.

The survey, carried out between April 24 and 27, found while more than half (52%) of people had been spending less on everyday life during the lockdown, and 17% had delayed making major purchases, nearly a third (31%) said they had not been saving money as a result of the lockdown.

One in 20 (5%) had started a “side hustle” during the lockdown – a sideline activity to make some money – as a way of raising some cash.

Typically, those who did have an emergency cash buffer put by had six months’ worth of salary saved.

Those aged 18 to 34 with savings had four and-a-half months’ worth of salary put by while over-55s had savings worth 10 months of their salary typically, the survey of more than 2,000 people across the UK by Opinium and AJ Bell found.

On average, people think it would be ideal to hold nine months’ salary as a cash buffer now they have seen the impact of Covid-19.

Tom Selby, a senior analyst at AJ Bell, said: “Millions of people in the UK were living on a financial precipice prior to the Covid-19 shutdown, with a fifth of workers admitting they had no emergency cash set aside whatsoever.

“Sadly many will now be facing huge financial distress as a result of losing their job or being forced to take a pay cut.”

Mr Selby added: “As a general rule you should aim to have enough money in an easy access cash account to cover at least three months’ fixed expenses.

“This should ensure you can pay any unexpected bills, although some will prefer to hold more than this to protect against less common risks.”