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Those of you who have read my blogs before will know how passionate I am about protecting what is important. I have previously explained the benefits life cover can bring together with a whole manner of other bespoke protection solutions.

Every financial plan we produce is only as robust as the foundations it is built upon. One of the cornerstones of our plans is ensuring that sufficient savings are in place to cater for life’s emergencies.

Despite the continued economic improvement, consumer savings levels have remained low, the latest Lloyds Bank Savings Index shows that half the population have less than two months income (£4,308) in savings.

The bank’s poll of 3,446 people in July, August and September 2014 also found 35 per cent have less than one month of income (£2,154) saved.

Only 16 per cent have more than four months’ of income in savings, which equates to savings in excess of £8,616, based on the average full time salary.

Despite low levels of savings, people understand the importance of saving more for a rainy day; with 87 per cent saying it is important to have a minimum amount to protect against unexpected costs.

Half said they would need at least two months’ worth of income for emergencies, with this figure being made up of 22 per cent who would need four months’ income or more.

Some 32 per cent said they cannot save due to a lack of spare money, yet despite this figure being the main reason for not saving, it has reduced significantly in the last year.

In the third quarter of 2013 this figure was 11 percentage points higher at 43 per cent.

Philip Robinson, savings director of Lloyds Bank, said: “Although confidence in the economy is improving, one in three of us still have less than a months’ income in savings. People do recognise the importance of saving and if they are able to get in the habit of putting away small amounts each month, the rainy day savings pot will grow as their circumstances improve.”

At FMB, we recommend that our clients retain 3 to 6 months expenditure in their ‘emergency fund’. This money should be available easily, without access restrictions, however, still earning a reasonable return so it does not necessarily need to be held in your current account. Easy access savings accounts, Cash ISA’s or offset mortgages are just some of the places we believe are suitable options for this money.

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