Could you be broke by next week?

Imagine you lost your income today. How long could you survive financially? For many Brits, it could be under a week.

A third of households in the UK have less than £250 in savings, according to research from HSBC. Worst still, a fifth of households don’t have any money set aside as a safety net.

This means the average family could run out of money in just five days – based on monthly expenditure of £1,669. Let’s say you started dipping into your savings on a Monday, your emergency fund would be depleted by Friday – a terrifying thought for those of us without wealthy relatives and trust funds.

Scarier still: it seems the number of families without adequate savings is on the increase. According to the research, the number of families with fewer than five days’ worth of savings has risen by three quarter of a million since last year.

But what is the reality if you lose your income? We look at how those quizzed claim they would support themselves to see how viable these plans actually are.

Option one: Use savings (40% would do this)

The reality: As the research from HSBC demonstrates, many Brits have worryingly low savings levels and financial gurus often advise us to have the equivalent of three months’ salary stashed away.

What’s more, savings and redundancy pay tend to dwindle quickly, so you may need to cut down on luxuries and budget more strictly.

Option two: Apply for benefits (30% would do this)

The reality: Of course, it’s prudent to check your benefit entitlement as soon as you become unemployed. As well as Jobseekers Allowance, you may be able to claim Income Support, Housing Benefit and tax credits.

Bear in mind, however, you may not be eligible for certain benefits. For example, those with more than £16,000 of savings aren’t entitled to Jobseekers Allowance and those with more than £6,000 could receive a reduced sum. What’s more, your partner’s income may also be taken into account when calculating your claim.

Option three: Claim on income protection insurance (14% would do this)

The reality: Income protection can provide a financial lifeline, but these policies often carry exemptions and technicalities.

Crucially, most policies include an excess period – the time from the date the claim is made until the payout. Having a longer excess period can reduce insurance premiums, but you would need to find another means of supporting yourself during the excess period.

To learn more about income protection, see our beginner’s guide here.

Option four: Rely on partner and family (13% would do this)

The reality: If you’re lucky enough to have a partner and family to support you, it could alleviate some of the financial pressure, but there are a number of things to consider before becoming financially dependent.

First off, you probably won’t be making any National Insurance contributions during this time, which may reduce the amount of your state pension.

If a partner supports you financially, you could face significant hardship if you were to split up – especially if you’re unmarried and don’t have children.

If your name isn’t on a mortgage and you haven’t made any financial contributions to the property, you may not have any legal right to remain in your home.

Option five: Use a credit card, personal loan or overdraft (11% would do this)

The reality: Unless you find another source of income, it’s unlikely you’ll be able to start paying down the debt and could face spiralling interest payments.

Should you find yourself in this situation, it’s wise to seek independent advice from organisations such as National Debtline, Citizens Advice or StepChange.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**

More sites on related content.. Click here for more.. How to get cheap van insurance quotes Read more here.. Where to get cheap quotes

commercial van insurance uk car and van insurance catering van insurance express van insurance van insurance company