Savers aged 18 to 24 are the most likely group to have less than £1,000 in their emergency savings amid rising inflation, a survey has found.
Research from HSBC UK found that the majority of savers have an emergency fund, with 61% said to keep money aside for a rainy day.
The average emergency fund balance stands at roughly £7,000, with 18 to 24-year-olds most likely to have £1,000 or less set aside (27%), the survey found.
On the other hand, 14% of respondents confirmed that they had a balance of £20,000, and were more likely to be over 55.
The figures coincide with inflation reaching a 40-year-high of 9% due to soaring energy and fuel bills amid the impact of the Ukraine war, and as economies emerge from the pandemic.
Additionally, data from the Office for National Statistics (ONS) revealed that regular wages excluding bonuses plunged by 4.5% in April when taking Consumer Prices Index (CPI) inflation into account – the biggest fall since records began in January 2001.
A quarter of respondents said that their emergency fund has reduced in the last year, with 43% citing rising living costs as the main cause, HSBC UK found.
Other reasons included having to cover an unexpected bill (20%) and paying off debt (6%).
Chantelle Perkins, senior financial wellbeing consultant at HSBC UK, said: “Adding to an emergency fund is a key part of building financial resilience.
“While we know this is not always possible, we would encourage savers to put aside enough to cover their monthly outgoings for between three and six months, so that they have a buffer should their circumstances change.
“However, we appreciate how difficult it is to save in the face of rising costs so it’s key for savers to know what resources are available to help manage their money.
“Budget calculators and features such as our financial fitness score tool can provide valuable support in helping people plan for the future.”
The survey was carried out online between April 8 and 11 2022 among 2,105 adults.