Not for the first time, we’ve run a story about the dismal state of many adults' personal finances and lack of saving - but the question is what to do about it and why does it happen?
According to a new study by wealth firm Handelsbanken Wealth, 20% of UK adults have no financial safety net or rainy day fund.
Women fare even worse, with 24% having no rainy day fund.
In fact, nearly one in three women aged 18-24 and 45-54 have no money set aside to cope with a financial shock such as unemployment or sudden loss of income, or meeting the costs of a personal financial emergency.
At the same time three in four women say they are worried about the cost of living crisis or a possible recession. Soaring energy prices, council tax bills and increase taxes are all weighing heavily on people.
There is an element here of poor planning or ‘head in the sand’ attitudes from some people who never plan ahead, never set aside some cash and just wait for a bill to come in. These are the people most at risk of getting into debt.
The fact is, however, that it’s not just these factors at play and we cannot blame all people for poor planning. According to the study, average financial assets held by UK adults, measured as the total value of cash savings, investments and pensions reported in the survey, have fallen by more than £13,000 over the past year, from £197,106 to £183,781.
People have been dipping into their savings to make ends meet. People are literally poorer than they were.
It’s often thought that the well off clients served by Financial Planners, who enjoy the benefit of professional financial help, are immune from these problems. I suspect not. Many people, especially younger clients, will be at the lower end of wealth and asset accumulation. Many will be finding saving tougher than they expected. They may well have cut back considerably on saving.
So what’s the answer? There is no magic wand here but the government, regulators and national financial bodies can do much more.
Budgeting and personal finance skills are missing from many people who have little idea how to manage within their means and just overspend. I should say here I exclude those on low or fixed incomes for whom making ends meet has always been a never-ending struggle.
A nationwide campaign, by MAPS or a similar body, to encourage people to learn basic budgeting and financial management skills would be no bad thing.
As I’ve mentioned previously, several of the UK’s best Financial Planners have told me in the past that they start their Financial Planning process with clients by teaching them how to budget. 'Even millionaires can go bust if they spend too much' is a phrase that's always stuck with me.
The other prong of a better personal finance culture is to encourage as many people as possible who can save to put many aside for a rainy day. We must reverse the recent chipping away of tax incentivised saving schemes which have encouraged millions to save in ISAs, pensions and the like. Saving should be seen as essential as a better diet or giving up smoking - something that is nationally desirable and in the national interest.
Without these changes, many face a lifetime of fear that they will run out of money when they least expect it and many of them will face just this crisis.
• Our latest issue of Financial Planning Today magazine is out now and features the findings of our exclusive Annual Reader Survey. To learn more about subscribing and receive unlimited access to our website content click here: Financial Planning Today Registration
Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and daily news. This topical comment appears most weeks, usually on Fridays but occasionally other days. Email: