Almost a fifth of self-employed workers have no savings at all – and less than one in ten protect their income, new research shows.
A poll carried out fo the Exeter suggests that 31% of self-employed workers have less than £2,000 in personal savings to fall back on if they suffer an “income shock”.
In spite of that, less than one in 10 (9%) protect their income through insurance.
A spokesman for The Exeter said the mismatch underlined the need for more people to seek financial advice.
The findings come as an estimated 2.7 million claims have been made through the Government’s Self-Employment Income Support Scheme during the COVID-19 pandemic.
More than half (52%) of self-employed respondents said they would rely on their savings if they suffered a loss of income. However, with 43% of those surveyed saving less than £50 per month, this raises concerns that few have “seriously considered” how long their savings would last in the face of an income shock, The Exeter spokesman said.
The Exeter CEO Andy Chapman added: “Self-employed and gig economy workers are a large part of the UK’s labour market, representing 15.3% of the workforce.
“However, despite the benefits which being self-employed can bring, this type of labour can pose risks to an individual’s financial situation if they are suddenly unable to work.
“Indeed, during the peak of the COVID-19 outbreak we saw many of these individuals face an income shortfall almost overnight as the UK went into lockdown.
“Half of self-employed workers in our survey said they would use their personal savings if they experienced a loss of income, despite a concerningly low level of savings among this group.
“However, what is perhaps more worrying is the significant level of underinsurance among this group, with just 9% of those surveyed saying they had income protection.
“While no one wants to consider not being able to work, it has become apparent that having a financial safety net is no longer a nice to have.
Economics consultancy Cebr carried out the research..