Savings advice: Survey unveils how much money it takes for savers to feel financially 'secure'

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  • The average person feels financially secure with around £4,000 saved up
  • Gen Z aims for £3,381, baby boomers prefer £5,150, and Gen X feels comfortable with £4,000 in savings
  • 63% of people believe they can handle a £400 expense, but 30% would struggle
  • 32% would dip into savings, 28% would seek help from family and 26% would delay non-essential expenses
  • On average, people save just 16% of their paycheck

Recent research has revealed that the average person feels financially secure only once they've stashed away around £4,000

In a survey of 2,000 employed Americans, evenly distributed across generations (500 Gen Z, 500 millennials, 500 Gen X, and 500 baby boomers), it was found that Gen Zers aim for a minimum of £3381 in savings to feel prepared. Gen Zers are those born between the mid-1990s and mid-2010.

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Baby boomers prefer a cushion of nearly £5,150, while Gen X feels most at ease with around £4,000 in their accounts.

Conducted by Talker Research on behalf of Chime, an American financial technology company, the survey revealed that 63% believe they could handle an unexpected £400 expense, but 30% acknowledged it would strain their finances.

Another 17% could not currently afford that type of expense, but believe they could eventually find some way to afford it. In order to chip away at that cost, 32% of respondents would dip into their savings, while 28% would phone family and friends.

(Photo: Pexels)(Photo: Pexels)
(Photo: Pexels) | Pexels

A quarter (26%) said they would pay off unexpected expenses by temporarily holding off on other expenses, such as groceries or less important bills. Nearly three in four (72%) spend most of their paycheck on paying bills, and 69% said that’s the first thing they do when they get paid.

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Twenty-nine percent of respondents said the first emotion they have when they receive their paychecks is “excitement.” However, that is usually followed by feelings of stress (19%), preparedness (19%) and overwhelm (19%).

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Leading up to payday, 39% admitted they’re more likely to avoid social events in order to save funds for when they really need it. This is likely a result of trying to combat the feeling of “pay paralysis” that 59% experience - a wave of anxiety or fear due to low funds between pay cycles.

“The survey also found that the average [person] starts to feel stressed about their money just seven days after receiving their paycheck,” said Madhu Muthukumar, Chief Product Officer at Chime.

“It’s clear that rising costs are impacting [people’s] well-being and people need simple, helpful and powerful tools to manage their budget, especially between paychecks.”

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Results also found the average person is taking steps to build their savings - setting aside 16% of their paycheck. Gen Z was found to take the most care, saving nearly a quarter (23%) of their paycheck.

Millennials meanwhile, said they’re able to set aside 17% of their paycheck for their savings. Gen Xers are saving 12% and baby boomers are saving 11%.

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Though 40% admit that their mental health is being negatively impacted by their current financial situation, 72% agreed that maintaining financial wellness positively impacts their mental health the same way that meditation or mindfulness does.

“Set clear financial goals that prioritise your needs and spending. Open communication about your financial boundaries can lead to better understanding and support in your inner circles,” said Dasha Kennedy, Personal Finance Advocate for Chime.

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“And practice open communication - talking about your financial boundaries can lead to better understanding and support from your inner circles.

“That means it is okay to say ‘no’ to events or purchases that don't fit your budget. Take the lead in suggesting group activities by using free or low-cost activities to stay connected without going over your budget.”

How do you manage your savings and prepare for unexpected expenses? Share your tips, stories and questions in the comments section.

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