Nearly half of UK families couldn’t last a month on savings if illness struck, study finds

LONDON — Do you have enough in your savings to keep you afloat for an extended period of time should illness force you out of work? A new study finds that nearly half of families with children in the United Kingdom have enough money saved up to last them not even a full month if health problems arose.

Researchers commissioned by Aviva insurance company released the “Protecting Our Families” study which examined data from 2,500 UK adults during the final quarter of 2016. Among the sample, nearly 1,600 were parents with dependent children and 435 had dealt with lost wages because of health issues or a death in the family.

Piggy bank savings
A new study finds that nearly half of all families with kids in the UK only have enough savings to last them a few weeks should illness strike.

The study found that should a family’s breadwinner fall ill, 45 percent of those with dependent children couldn’t survive on their savings for more than a few weeks. Even if they cut spending to a minimum, 36 percent of families still could not last a month from available funds.

Cutting costs would be difficult for many, however. Eighteen percent of those surveyed claimed there was no room for them to cut back if they had to.

Perhaps more alarming: nearly 1 in 4 families (24 percent) had no savings to turn to whatsoever.

“It’s a persistent worry that a large number of families are unprotected against a financial shock should they suffer an unexpected loss of income due to ill health or death,” says Paul Brencher, Aviva’s Managing Director for Individual Protection, in a company press release. “The reality of facing this can cause real financial hardship for families. Struggling to stay afloat financially is the last thing families need in addition to the emotional turmoil of falling ill or experiencing a death in the family.

The study found that the average family had about £2,004 British pounds, or about $2,570 in U.S. dollars, saved up — while typically spending £2,606 pounds ($3,341) on groceries and household bills each month.

Interestingly, those surveyed, when asked, assumed they had enough in savings to last them five months, if illness struck. The survey produced a stunning reality check.

“No one likes to dwell on the possibility of experiencing a period of ill health or worse, but it’s important families have honest conversations about how they might cope in these circumstances,” says Brencher. “Family finances can be complex, so all areas – such as savings, insurance, housing and other assets – must be considered. A small regular sacrifice now, either by boosting savings or taking out relevant insurance, would help protect families’ financial resilience and ensure unexpected events are easier to financially cope with.”

As for what would happen should a breadwinner pass away — only 46 percent of parents with children have life insurance in place, while 35 percent have a will prepared. To put it in perspective, more people have travel insurance (38 percent) than a will.

The most common reason among those surveyed when it came to why they weren’t prepared — they just didn’t think they needed such insurance or protections in place. Yet the study found that 27 percent of families with have experienced a loss due to health problems or a family death.

The study revealed plenty of other surprising findings related to a breadwinner suffering from health issues. Click here to read more.

Table: The typical finances for a family with dependent children in pounds and pence 

Household finances
Average monthly net income £2,709
Average monthly outgoings £2,606
Typical savings and investments, excluding pension £2,004
Typical amount held in pension savings £36,364
Typical house value £199,457
Typical mortgage £77,122
Typical housing equity £122,335
Monthly spending patterns
Average monthly spend on the following:
Housing (mortgage or rent) £402
Food shop – food, drink and basic household goods £815
Utilities bills and council tax £195
Anticipated amount they could reduce their monthly spending to £2,451 (a reduction of £154 reduction)
Absolute minimum amount they could get by on each month when asked to reassess every element of their finances £1,904 (a reduction of £701)
Percentage who say they could not reduce their spending at all for a period of at least six months 18%
Percentage who say they could not reduce key items of expenditure for a period of at least six months Utility bills and council tax – 48%

Housing (rent or mortgage payments) – 47%

Debt repayment – 20%