How far is poverty?


There were some figures in a report  (by insurer L & G) recently that make quite scary reading.


Essentially, the average household in the UK is 18 days away from poverty.


So if the main breadwinner unexpectedly died or was off work due to a long-term sickness or injury, the family would have just over two weeks until the money ran out.

Obviously, that’s an average, so it probably doesn’t apply to you; in the same way that the “average” family with 2.4 children doesn’t apply to you – unless you have exactly 0.4 of a child, of course!


But it does mean that if some people are far better off than that, some are worse off and are, presumably, less than a week from being unable to pay the rent, mortgage, food bills etc. In fact, the survey indicates that 37% are in that position, they have no savings and could be in trouble tomorrow, unless they’ve got some sort of insurance.


Similarly, the findings indicate average savings of £660, and that the “18 day” figure is more than three times lower than households estimate their savings would last.


What to do?


Read chapter 10 of Taming the Pound!  I explain in there how you can work out for yourself what you need – and then you can get help to arrange cover, change your spending and savings patterns etc.  I also explain how to make those changes.


Interestingly, in the blurb from the L & G (sent to financial advisers) they say, “We also found only 31% of UK households are protected by life insurance or critical illness cover.”


That’s a fair point, but the thing many people need (also explained in Taming the Pound) is “permanent” protection, something that pays and goes on paying if you are ill or injured and can’t work.  It’s not like critical illness cover that gives you a one off payment and then leaves you to get on with it, however long you can’t work (or doesn’t pay you at all if you have an injury or illness that isn’t defined as “critical”). 


The trouble is, critical illness cover  is easier to understand and (most important) sell than permanent protection.  I said in Taming the Pound that ongoing protection is undersold, because of the fact that it’s hard for salesmen to understand and even harder for them to explain.  The figures bear that out, as they have for decades.


So the report is a great wake-up call to look at your finances and your lifestyle.  But it’s a lousy suggestion of what to do about it.


Ignore what people want to sell you.  


Work out what you want to buy and how you want to change, and do that.  You’re an individual, you are complex.  Nobody can tell you exactly what you “ought” to do, or what you “ought” to buy.  You can work it out, then you can decide what you actually need and what is worth doing and paying for.


You are the important bit not the money.  And you are the complicated bit, not the insurance policies.





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