A third of homes in the North East are unprepared for financial shock, says the region’s dedicated think tank, Policy North.
Thousands of households have enough money to last just two weeks should they be hit by redundancy or job loss, new figures show.
Analysis of household savings reveals little financial headroom and widespread lack of preparedness for unexpected loss of income.
According to a study involving 2,000 people, by Newcastle financial technology firm True Potential on behalf of independent cross-party think tank Policy North, 31 per cent of households in the region have just £500 or less of easily accessible savings.
The research also shows that the average household in the north has monthly expenditure of £1,249, putting close to a third of households less than two weeks from bankruptcy should they suddenly lose their main source of income.
Stephen Purvis, Chairman of Policy North, said: “We know that the people of the North East are resilient but these figures are particularly concerning. We need to ask the right questions – why are households in this region struggling to save? If it’s a lack of education around managing personal finances, then this should be addressed through accessible resources which help people understand the precariousness of spending without saving. We need to offer alternative advice to ensure households can safeguard their financial futures.”
David Harrison, Policy North Advisory Board member and Managing Partner at True Potential, said: “The economy is improving nationally and regional unemployment is coming down but many people in work still struggle to put money aside each month. That means there is very little financial breathing space.
“It’s no use lecturing people to save more if they are already struggling and aren’t sure what to do. Financial advisers can help and ultimately we need proper financial education in schools so that by the time people enter the workplace, they have a good grasp of budgeting, investing, and ways to save that get the best returns.”
True Potential employs over 200 people at its Newcastle base and in 2016 was named by Deloitte as one of the 50 fastest growing technology companies in the UK.