How do families protect themselves from unexpected financial trouble? There are essentially three choices: they put savings aside, they bank on having sufficient income to ride out the storm, or they take out insurance. But in Britain today, even with an economic recovery now established, too many households have none of these options.
Statistics have highlighted that few people have cash put aside for a rainy day. The Bank of England’s figures show that Britons withdrew money from their savings at the fastest rate for 40 years during 2013. Overall, Britons took £23bn out of their savings last year, the Bank of England reports – that’s equivalent to a £900 withdrawal by every household in the country.
These bad savings habits will result in many people running out of money very quickly if they hit financial trouble. Money Advice Service warned in January that 33% of Britons have no savings at all to protect them from adversity, even though more than 71% experienced unexpected bills of one type or another last year. 
Income pressures Lack of control of personal finances isn’t the only issue; people can’t depend on income either. While growth has returned, higher energy bills and muted pay rises are causing a tight squeeze on household incomes – in January, the Office for National Statistics said that the value of people’s income, adjusted for inflation, has been falling by 2.2% a year since the banking crisis.
This financial pressure isn’t just confined to younger generations; research conducted by Alliance Trust shows that the older generation are hit the hardest by rising bills and face steeper inflation because they spend a large share of their budget on basic goods such as gas and electricity.
See related spreadsheet attached which contains Bank of England data on changes to time deposit holdings
See data in this ONS publication: http://www.ons.gov.uk/ons/rel/elmr/an-examination-of-falling-real-wages/2010-to-2013/art-an-examination-of-falling-real-wages.html
 See related PDF – Alliance Trust inflation research