Savers ‘left vulnerable by squeezed incomes’

Some 11 per cent of people in the UK are having to dip into their savings every month to cover their living expenses.

This is according to research…

Some 11 per cent of people in the UK are having to dip into their savings every month to cover their living expenses.

This is according to research from Lloyds TSB, which found that squeezed incomes are making it hard for consumers to make ends meet. As people are finding their spending power reduced, they are also being forced to use their nest eggs to cover any unexpected outgoings.

On top of this, more than half of all UK adults (53 per cent) expect to turn to their savings at some stage in 2013 to help them out.

Worryingly, 38 per cent of Britons have less than their household monthly income in savings and so a change in their personal circumstances could have disastrous effects on their bank balance. Typically, individuals are encouraged to have the equivalent of two and a half months of their household income put away as a rainy day fund.

Andy Bickers, savings director at Lloyds TSB, said: "The nation's wallets have been under much strain for some time now, so it is not surprising that savings have moved down the priority list for many. Although, it is encouraging that so many agree that it is important to save, it is clear that many are struggling to do so in the current climate."

If households find that their finances are under too much strain, then seeking debt advice is advisable. Individuals should not bury their heads in the sand, as this will only make the problem worse.

Instead, being proactive and signing up for a debt management plan could be the best course of action. In most cases, this solution allows consumers to reduce their monthly repayment schedule, while creditors will also stop bothering them.

People need to owe more than £1,500 – spread across at least two creditors – in order to qualify for the measure, which should make it much easier for Britons to clear their debts and start afresh.

By James Francis

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