The families with just £95 in savings

FAMILIES on low incomes typically have less than £100 in their rainy- day fund, a report has found.

The savings gap between households on low and high incomes has widened over the past year, with families earning £1,500 or less a month having an average of just £95 in savings and investments.

A year ago, the figure – which does not include money being saved into pensions – was £136, Aviva researchers said.

High-income families, meanwhile, have been storing up more cash, with a typical savings pot of £62,885 for households with an income of £5,001 a month or more. A year ago, the figure was £50,208.

The typical amount held in savings and i nvestments across all UK families has fallen from £4,426 last summer to £3,134 – the lowest level since summer 2015. Only three regions have savings and investments, excluding pensions, worth more than £3,000 on average – London, Wales and the South East of England.

Families in London have by far the most put away, at more than £ 13,300 on average, which may reflect higher earnings and higher living costs there generally, meaning peo- ple are putting larger amounts aside. Families in the West Midlands were found to have the lowest typical savings, at £1,700 – the only region to have savings and investments worth less than £2,000.

More than two-fifths (43 per cent) of families said significant increases in the price of basic necessities is one of the biggest threats to their stand- ard of living in the next three months, up from 36 per cent last summer. Aviva spokesman Paul Brencher said:

‘The gulf between low and high-income families is showing signs of widening, in a worrying i ndication that those less fortunate are finding their finances increasingly stretched. While high-income families have been able to increase their savings, those with low incomes have seen theirs fall to less than £100.

‘With inflation climbing fast, families are understandably concerned about the impact of rising prices on the household purse.

‘Poor returns on savings and rising inflation means families could well see their safety net eroded if they don’t keep up regular contributions and try to boost savings pots.’

Financial information website Moneyfacts found only one in 30 savings accounts on the market boasted interest rates that beat or matched the Consumer Price Index rate of 1.8 per cent.