The average household emergency savings pot falls £7,443 short of where it needs to be (Image: Getty)
Households across the UK have been issued a £7,443 ‘emergency’ savings warning to protect against unexpected bills. New research by Compare the Market shows almost seven in 10 (69%) of UK adults have faced significant unexpected expenses, but the average emergency savings pot falls thousands of pounds short to manage these costs.
According to Compare the Market, the average cost of a large unexpected household bill over the past 12 months reached £10,996, with car repairs, vet bills and broken boilers all falling into this category. But the average emergency savings pot in the UK sits at just £3,553 – a whopping £7,443 short of where it needs to be.
This £7,4333 shortfall means that even those who try to prepare for emergencies can fall financially short, while nearly a quarter (22%) of households have absolutely no savings to fall back on at all.
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The research found that while three-quarters of people report having some level of emergency savings, many are not in a position to be able to afford an unexpected bill.
Urgent car repairs came in as the top large bill, while personal tech repairs for phones and laptops rank as the most common source of smaller bills.
To cope with the financial strain, experts advise making small changes to daily spending habits, including pausing purchases on new clothes or accessories, and delaying home improvements, as this will slowly help to build up savings and give you more of a cushion when an emergency cost strikes.
Charlie Evans, money expert at Compare the Market, says: “Unexpected bills can throw even the most careful budgets off track, which is why it’s important to build flexibility into your finances.
“Start by creating a clear budget so you understand exactly what’s coming in and going out and try to set aside a little bit each month to cover one-off costs. Even adding small contributions to a rainy day fund, can help with the impact of larger, less frequent expenses.
“It’s also worth reviewing your regular bills and subscriptions to make sure you’re not overpaying, and setting up direct debits or reminders so nothing is missed. If you do need to borrow, plan ahead by choosing the lowest interest option and only borrowing what you can realistically repay.
“Taking these steps can help you stay in control and feel more prepared when life throws an unexpected expense your way.”
Abigail Foster, personal finance expert, added: “If you’re reading this and feel like you don’t have your finances fully figured out, you’re not alone. With nearly a quarter of people having no financial safety net to fall back on, it shows just how widespread this is. We’re all navigating it and with the right support and small, consistent steps, it can start to feel far more manageable.
“To start tackling your money worries, it helps to take a step back and look at the bigger picture. One of the simplest but most effective things you can do is sit down and write everything out.
“Seeing your finances clearly on paper makes it much easier to spot patterns, like lifestyle creep, which can build up gradually without you even noticing. From there, you can start to redirect your focus towards building a basic emergency fund and creating a bit more stability.
“It’s worth remembering you don’t have to figure money out on your own. Using online tools to check you’re still getting great value for your outgoings can help you stay on top of what you’re paying, while open conversations with friends and family can be a great way to swap tips, share experiences and learn together.”