Consumers are currently facing a £371bn savings shortfall when it comes to feeling able to withstand a financial shock, according to Yorkshire Building Society’s The Nation’s Nest Egg report.
The report, which was conducted in partnership with the Centre for Economics and Business Research (Cebr), found that UK adults require savings of £17,465 to feel financially secure.
The report also found that the average Brit needed an additional £7,220 to reach that savings goal.
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Despite the pandemic, the UK’s overall financial resilience has improved over the past year, rising to a rating of 57 out of 100, up from 44 in 2019.
This score was determined by assessing four pillars: shock resilience, probability of income shock, financial health and ability to plan for difficulty.
The past year has caused many to reassess their attitudes towards savings, and as a result 46% of 18 to 34-year-olds said they will save more carefully post-pandemic.
A third (32%) of men and two-fifths (41%) of women said that greater financial security would make them feel less anxious or depressed.
Most people would like more money in cash savings (37%), followed by reducing their debt (25%) or owning a property (23%).
The East of England proved to be the most financially resilient region, scoring 61 out of 100.
This was followed by the Scotland (56) and London (48).
The North East proved to be the least financially resilient region, scoring 40.
Edinburgh ranked as the UK’s most financially resilient large city, scoring 64, while Milton Keynes proved to be the least resilient, scoring 44.
Tina Hughes, director of savings at Yorkshire Building Society, said: “Despite many people managing to put away more money during the past 18 months, this latest research proves just how fragile people’s savings are, and how far away they are from reaching a state where they feel they have sufficient reserves to be financially secure.
“Whilst some people were able to save throughout the pandemic, that hasn’t been the case for everyone, with many now more exposed than before to financial shocks.
“As a society we know how difficult it is for people up and down the country to save towards their nest egg, and we are committed to helping more individuals build their financial resilience.
“Money worries can have a detrimental impact on people’s wellbeing and so we are here to help them in times of need.
“However, it’s positive to see that overall, the UK’s financial resilience has improved, and it’s hoped that as we emerge from the pandemic those who have been able to increase their savings, will maintain these good money habits and grow their savings safety nets.”
Nitesh Patel, strategic economist at Yorkshire Building Society, added: “The country has been battling the impacts of the pandemic for the last 18 months, and we can now paint a comprehensive picture of how the crisis has impacted the nation’s financial resilience.
“We know that people’s opportunities to spend have been curtailed whilst many who have been working remotely have found a reduction in their outgoings.
“This has resulted in additional savings of £190bn over the last 18 months.
“However, whilst the overall UK household savings rate may have increased from 7% in 2019 to 16% in 2020, there are still pockets of society who have been more significantly impacted than others, and therefore are more likely to be in need of financial support and education on how to improve their financial situation.
“The changes in the city and regional rankings are perhaps reflective of the different lockdown restrictions that were implemented up and down the country.
“In some regions and cities, the increase in financial resilience may have been caused by tougher, longer COVID restrictions being in place, meaning people in those areas were able to save more.
“However, this theory isn’t necessarily reflective across all regions.
“As the economy gets back on its feet, its essential that we remember that many people have been made more financially vulnerable by the impacts of the pandemic, and as a society we are here to help them in their time of need.”