A ‘RAINY DAY FUND’ IS NOW AN URGENT NECESSITY

The financial resilience of households across the UK is under intense scrutiny as new data reveals a startling lack of a buffer against life’s unpredictable turns. For many, the concept of a ‘rainy day fund’ has moved from a prudent financial goal to an urgent necessity, yet the reality remains precarious.

Recent research suggests that a significant proportion of the population is walking a financial tightrope [1]. The study finds that one in five UK adults (21%) would be forced to borrow to cover an unexpected expense of just £250. This highlights the fragility of household finances: a relatively minor, unforeseen cost, such as a car repair or a broken appliance, could trigger a slide into debt.

REALITY OF FINANCIAL VULNERABILITY

For those who admitted they would need to borrow to bridge this £250 gap, methods vary, but high-interest options remain worryingly common. The data indicates that 13% of respondents would use a credit card to cover the cost, while 4% would have to ask friends or family for a loan. More concerning still are the 1% who would resort to personal loans and the further 1% who would turn to payday lenders, often exacerbating their financial difficulties with high interest rates.

Perhaps most alarming is the segment of the population for whom borrowing isn’t even an option or wouldn’t be sufficient. The research found that 5% of adults would be unable to pay a £250 emergency bill. This highlights a severe lack of liquidity for millions of people, leaving them exposed to immense stress should the unexpected occur. It paints a vivid picture of the ‘emergency savings gap’ that separates financial stability from crisis.

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Source data:

[1] Retirement Voice 2025 – research conducted by Ipsos on behalf of Standard Life in June 2025. In total, 6,000 participants took part in the online survey. Participants were aged 18- 80 and included working, unemployed and retired people. Quotas and weights were used to ensure respondents were representative of the UK general population by age, gender and region.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax planning is not regulated by the Financial Conduct Authority, depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.