In its reality gap report, the protection provider found that 43 per cent of Britons believe they could use their savings to pay the bills following a redundancy, but in reality 38 per cent of the UK’s working population could not survive beyond one month on savings alone, says Bright Grey.
While Britons believe their average outgoings is £892 per month, it is in fact £1,378 per month, the report reveals.
The report also found that 28 per cent of those surveyed said they would ask creditors for help if they were unable to pay their bills and a further 13 per cent would rely on credit and loans. But Bright Grey says with 33,600 of credit applications turned down everyday this year, the chances of using extra credit to get by are slimmer than many people would hope for.
Around a fifth of Britons say they would sell the home if they had to in order to get by, and one in five would remortgage. But Bright Grey warns with a 58 per cent decline in gross mortgage lending since May 2008, and a property repossessed every 10 minutes, homes have become an unreliable source of emergency funding.
Bright Grey proposition director Roger Edwards says: “From our report, it’s clear that Brits are ill informed when it comes to their finances. Not only are they grossly overestimating how long they could survive if they lost their income stream, but even more worrying is that they have no real concept of what they’re spending each month, making it very difficult to budget and plan effectively.
“When it comes to financial planning, most people seem to have the blinkers firmly in place. However, if they start to pull together a realistic plan now they could save themselves a lot of heartache in the future.”