Rainy-Day Funds Seem to Be Drying Up

NEW YORK (MainStreet) — First to go was the Christmas Club accounts — savings vehicles banks offered to customers so they'd have money set aside for holiday shopping.

Now what's slipping away is the venerable "rainy day" fund — savings vehicles that guaranteed a household would have cash in an emergency such as a job loss or serious health issue.

Global consumers are increasingly turning their backs on emergency savings funds just as the economic evidence suggest they need it most.

According to London-based Lloyds Bank, 36% of U.K. consumers say they have no rainy-day fund, and another 31% say they're not saving any money at all.

The drought seems to be across the board, but it's consumers between the ages of 25 and 54 that are really pulling back on emergency savings. The Lloyds Bank Savings Index reports that only 40% of that demographic have a rainy-day fund equal to more than one month worth of household income.

That won't go far in the event of a financial catastrophe, and consumers know it.

In fact, the Lloyds data point to an interesting contradiction: 88% of U.K. adults say that having a rainy-day fund is important, yet only 49% say they have enough to cover basic life needs in the event of an emergency. Of those who say they haven't saved any cash in the past year, 43% have a simple but somewhat chilling explanation —┬áthere is no money left in the household budget at the end of the month.

"Many consumers are still feeling the squeeze; this means they don't have the spare money to put into savings," says Andy Bickers, savings director at Lloyds Bank. "However, it is encouraging to see that the vast majority of people feel that it is important to save regularly, and the amount of people saving has remained stable again this quarter."