Why millions of people may be just 11 days from financial ruin .

Unemployment could soar to 2.5m over the next two years


More than a third of adults could survive financially for only 11
days if they were to lose their job or be too ill to work, according to
a survey.
The finding gives a worrying insight into the lives of millions who are living on a financial tightrope.
Researchers looked at how much people spend every month and how much they have in savings.
It found a massive gap between the two, which means most would be crippled by a sudden change in their circumstances.
The research involved interviews with more than 2,000 adults about
their typical weekly spending and their accessible savings, which
excludes pension.
It found the average weekly spend is £333.56 including essentials,
such as council tax, luxuries, such as eating out, and debt repayments.

But a shocking 36 per cent of people have less than £500 in savings to use in an emergency.
As a result, they could survive for just 11 days before their finances would implode.
On average, women would be much less well prepared to cope than men.
Tanya Jackson of Yorkshire Building Society, which carried out the
research, said: 'In the current economic climate, this research paints
an extremely alarming picture.
'Many people's finances are already finely balanced due to the rising cost of living.
'But our research reveals that both state benefits and savings are
not viable options for the majority of consumers to rely upon for any
adequate length of time.' The findings come as the likelihood of people losing their jobs is
rising as bosses seek to cope with the economic downturn. Economists
believe unemployment-could rise from 1.6million to 2.5million over the
next two years.
On Wednesday, the Bank of England said it has found evidence of
bosses starting to freeze or cut back on recruiting staff to reduce
costs.
Overall, the research from Yorkshire Building Society found that a
typical person could survive for 52 days before hitting financial
disaster.
They have monthly outgoings of £1,445 but savings of only £2,474, excluding any money tied up in a pension fund.Few have any insurance to protect themselves against the sudden financial shock of losing their job or becoming ill.
In fact, the research found they are more likely to have insurance
which will pay out if they die than insurance to cover becoming ill or
unemployed.
The report said: 'The majority are therefore better prepared for
their own death, than if they were unable to work due to illness.'
One in five people said they had 'no idea' how they would cope if they were suddenly unable to work.
Some said they would sell their home if they needed to get money quickly, but this is no longer a practical option.
The number of homes which are finding a buyer has halved over the
past year, with many sellers forced to wait or slash their asking
price.
The Association of British Insurers has urged the Government to
introduce incentives to persuade people to improve their financial
security.
These include increasing the tax-free ISA savings allowance to
£9,600 and promoting longterm investments rather than cash deposit
accounts.
The ABI said the average household had run up unsecured debts of
£21,000, with people owing a further £102,000 on their mortgage.

From the London Standard:


Looks pretty bleak.