Millions of UK savers relying on ‘rainy day’ funds

Millions of savers in the UK are relying on “rainy day” funds to cope with the impact of coronavirus, according to research published by Scottish Friendly.

The research revealed more than four in ten (45%) UK savers are expecting to draw money out of savings and investments to cope with the impact of the COVID-19 pandemic.

The Glasgow-based mutual suggested one in five (21%) savers are planning to draw money from easy-access savings accounts, a further 19% of people are set to reduce regular savings into their cash accounts, while 13% are considering requesting a mortgage payment holiday from their bank. Another 9% suggested they would reduce or stop regular stocks and shares ISA contributions.

The study, which quizzed 1,000 adults in the UK a week into the country’s lockdown, showed that 44% of respondents are worried about their job security, compared to 29% who indicated they were not concerned.

Furthermore, the research revealed that 33% of respondents believe it is likely they will be unable to pay some household bills over the coming weeks due to the knock-on effect coronavirus is having on their income.

Savers who have a “rainy day” fund set aside, however, shouldn’t be anxious about drawing on their cash, according to Scottish Friendly commercial director, Neil Lovatt.

“The recent changes to many people’s employment status has had an adverse effect on some household incomes and people are clearly looking at ways to shore up their finances, as the figures show,” he commented.

“The sensible thing to do if you’ve seen a drop in your earnings and have less disposable income, is to pause your regular savings or investments. If you have a rainy day fund set aside then now could be the time to draw on that pot of money because frankly if this isn’t a downpour, then what is?

“For those individuals who might have a diverse portfolio of savings and investments, consider drawing down from your better performing assets, rather than sell evenly across your portfolio. In other words, use the diversity of your investments to give yourself some much needed stability and security.

“When, in the future, the climate is a little brighter that’s the time to switch back on your regular contributions and repair your portfolio getting back to a diverse mix of assets.”

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