Half the UK workforce has less than 4 months’ savings

Findings from Egg.com reveal that 50% of workers in the UK do not have the cash savings needed to survive being without work for four months – the average it takes to find a job if you are made redundant.

Making the decision to put money away for a rainy day could be the most important financial choice you’ll ever make. As difficult as it may sound, setting a little money aside each month – possibly putting it into a savings account (especially ISAs because all gains are tax free!) – will help you greatly if were to lose your job or experience an alternative unfortunate change in circumstances.

Using an online Budget Calculator is one way of checking that you are using your money in a fashion that allows you to save in the quantity you need, whether that’s just a little each month or a lot. To learn more about saving, visit Moneybasics: Saving. You can read about how you can earn interest and other options available to you regarding where you what you can do with your money.

Please read on for summary of the top personal finance news stories for the last few days, starting Tuesday May 27th 2008.

Tuesday 27th May

Service sector suffering – The latest survey from the Confederation of British Industry (CBI) has shown that the services sector is being hit particularly hard by the recent economic uncertainty. The leisure, entertainment and restaurant sectors have been affected worst with many more choosing to eat at home, cancel their gym memberships and watch DVDs, instead of going to the cinema.

With the cost of living on the rise it is important to enjoy luxuries, such as cinema trips, only when you know that you can still afford them. It is essential that we make sure that we continue to live within our means.

Wednesday 28th May

Mortgage lending continues to drop – Monthly figures from the British Bankers’ Association (BBA) were released this week showing that lenders are still tightly restricting the number of households that they lend money to.

The number of new mortgage approvals – mortgages that were offered by lenders but not necessarily taken up – fell 39% on a year-on-year basis in April 2008.

Moneybasics has a section on Mortgages, covering the fundamentals of what you need to know about them: types of mortgages, how much you can borrow and why a mortgage may/may not be suitable for you. Why not check it out now?

Warning about mortgage troubles – 1.8 million homeowners will have struggled to cover their monthly mortgage repayments by the end of the year according to the insurance firm AXA. With further news from Hometrack showing that house prices remain in freefall, it is wise to exercise heightened prudence at the present time. The economic climate doesn’t look it is going to get any better in the near future so, while you may not be struggling right now, it is important to act now and make sure that, no matter what the future holds, you are able to remain financially solvent. Get budgeting and get planning.

Prepared for Moneybasics by Jason Taylor, Advocacy Officer (Credit Action).