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Fifth of young low-earners 'couldn't survive a month without their job'

Published 13 February 2012 by

One fifth of low earners in the 16-29 age group wouldn't have enough money in their bank accounts to last a month if they became unemployed, according to research by the Institute for Public Policy Research (IPPR).

As reported by The Telegraph, the research of young people earning less than £21,000 a year found that many people are "particularly vulnerable" to financial problems because they have not built up an adequate savings reserve.

And although almost two thirds of this age group said they want to own their own home, just one in five have more than £5,000 in their bank accounts and savings accounts - not nearly enough to cover the deposit most mortgage lenders would ask for.

IPPR chief economist Tony Dolphin said: "This polling shows a huge gap between the extent to which young people on low incomes think they have enough saved for a rainy day and the reality of what they really have in their bank accounts.

"Most financial advisers would recommend that people put aside the equivalent of three months take-home pay for an emergency. But our poll suggests that very few young people have the reserves they would need if they were made redundant."

An expert at thinkmoney commented: "Clearly a lot of people are in a position where they are managing fairly well financially, but would quickly struggle if their circumstances changed. This is all the more true for people who have trouble planning ahead or budgeting.

"We urge people to take the time to plan out their finances each month - or to find a bank account that can help them do this - leaving room for savings if possible."

The thinkmoney Personal Account helps its customers to budget with its two-account approach. At the start of each month, money for bills and other essentials is put to one side, leaving account holders with money they know is safe to spend in their 'card' account. 

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