Can You Afford a £500 Emergency? 45% of Young Adults in the UK Say They'd Need to Borrow

A staggering 45% of young adults aged 18-34 in the UK would need to borrow money to cover an unexpected £500 expense, revealing a financial vulnerability crisis that threatens the economic stability of an entire generation.

New research by Hodge Bank reveals a shocking generational divide in financial resilience, with younger Britons eight times more likely to lack basic emergency funds than those aged 65 and above.

In contrast, only 19% of those aged 45–54 would do the same, while the figure falls further to 11% for those aged 55–64 and to just 5.8% among those aged 65 and above.

The survey's findings paint a portrait of a nation where financial emergencies have become routine rather than exceptional, with one in five Britons admitting they save nothing at all from their monthly income.

The New Normal: When Emergencies Become Everyday

For a growing number of UK households, financial surprises are no longer rare events—they're becoming a routine part of life.

The latest research by Hodge Bank reveals that expenses once considered exceptional, such as car breakdowns or emergency vet visits, are now occurring with striking regularity.

Over a third of respondents (37.6%) reported needing emergency funds for car repairs in the past year, while 30% cited unplanned home repairs as a significant financial drain. Other common emergencies include vet bills (17.2%), dental or medical treatment (15.2%), and childcare costs (8.7%).

Christie Cook, Managing Director of Retail at Hodge, said: 'What's most striking is the regularity of these unexpected costs. For some people, this isn't a rare occurrence but something they're dealing with weekly, if not daily.'

This new normal reflects a broader shift in financial reality. Unplanned costs are no longer infrequent budget blips but ongoing stressors that demand a constant state of financial preparedness. The pressure is especially acute for younger adults, who often juggle lower wages, higher housing costs, and less accumulated savings.

The impact of such frequent disruptions stretches beyond the bank balance. They hinder long-term planning, making it more challenging to save for primary goals, such as home ownership or retirement.

Without an adequate safety net, even a minor expense, such as a £200 car service, can spiral into high-interest debt or borrowing from friends and family.

As economic volatility, inflation, and lifestyle demands persist, the traditional idea of a 'rainy day fund' is evolving. Britons now need savings that can act like a financial umbrella for what increasingly feels like a constant downpour.

This daily unpredictability highlights why flexible savings accounts are becoming increasingly relevant. Many savers now prioritise liquidity over long-term lock-ins, opting for adaptable, low-barrier options to help cushion against unexpected financial challenges.

In this climate, budgeting for the unexpected is no longer just prudent—it's essential.

Britons Relying on Credit and Debit to Stay Afloat

The report further reveals that 41.4% of UK adults would resort to a credit card to cover an unexpected £500 expense. A slightly higher number (46%) would use a debit account, likely drawing on their regular income or any leftover savings.

Alarmingly, one in five Britons (20%) admit to not saving any portion of their income at all. This lack of a financial cushion compounds the difficulty of handling sudden costs, increasing reliance on borrowing and deepening financial vulnerability.

Inflation Pressure and Eroding Buffers

This research is set against the backdrop of rising inflation, stagnant wages, and increasing living costs. The Office for National Statistics (ONS) recently reported that inflation has slowed, but food prices remain high, and housing costs continue to rise.

With essentials eating into monthly income, building a buffer is becoming increasingly complex. The Financial Conduct Authority (FCA) estimates that 49% of adults in the UK showed signs of financial vulnerability in 2024. This includes factors like low savings, high debt levels, and struggling to meet basic living costs

Cook added: 'The frequency of unplanned expenses leaves less room for longer-term financial planning and increases the need for accessible, short-term savings options.'

Rethinking Financial Planning

The research invites a broader conversation around financial education, intergenerational inequality, and support systems. With many younger Britons struggling to weather even modest financial shocks, the role of financial planning tools, savings products, and government policy will become increasingly important in addressing systemic gaps.

For many, the ability to handle a £500 emergency is not just about budgeting; it's about survival. And unless the trend is reversed, more young people may find themselves trapped in cycles of debt, stress, and economic instability.

A Nation at Risk

Unless current trends reverse, Britain faces the prospect of an entire generation trapped in perpetual financial precarity. Young adults who cannot weather £500 emergencies in their twenties will struggle to build the wealth necessary for homeownership, family formation, or secure retirement.

The implications extend beyond individual households to affect national economic stability. A population living paycheck to paycheck cannot drive consumer spending growth or provide the stable tax base necessary for public services.

As Cook's research demonstrates, the ability to handle modest financial shocks has become a luxury rather than a basic expectation. Without systemic changes to address income inequality, housing costs, and emergency support systems, millions of Britons will continue to be trapped in cycles of debt, stress, and economic instability.

The £500 emergency has become Britain's financial litmus test—and far too many are failing it.