Swedes struggle with unforeseen expenses

Nearly one in four households, or 22 percent, would have difficulty dealing with an unforeseen expense of 5,000 kronor ($635), according to a study by Länsförsäkringar.

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The study showed that 34 percent would struggle to cope with 10,000 kronor more in expenses, while 49 percent would have problems addressing an additional 20,000 kronor in expenses, the study, which was conducted among Swedes aged 25 to 65, revealed.

More men than women believe that they can cope with unforeseen expenses, regardless of the amount. In two-parent households, more than eight out of ten said they could cope with an unplanned one-off expense of 5,000 kronor. Among single parents, only 45 percent said they would cope with such an expense.

The financial situations varied between counties. In Halland, 26 percent of households said they could not sustain an extra expenditure of 10,000 kronor, while in Södermanland, 40 percent said they could not make the sum.

It is important to secure a buffer in a regular bank account of about two or three times one's monthly net salary, said Ingela Gabrielsson, family economist at Nordea.

"It might take time to accumulate it, so one must get started with setting aside money every month," said Gabrielsson. "Even if it is very little, one can put it aside. It's better than nothing."

She questioned how so many people can be so badly off despite low mortgage rates and tax cuts.

"Maybe these are long-standing holes to fill and so we happily consume," said Gabrielsson, who believes that SMS loans and credit cards often act as a safety net when one's car breaks down or one deals with a high dentist's bill.

"It is easy for it to become a vicious circle that people cannot get out of," she added. "People get trapped making new installments all the time and there is still not enough to get by."

Even Finance Minister Anders Borg believes it is important for households to try to create a financial buffer.

In response to whether he believed it was concern that households have such tight financial margins, Borg responded, "Yes, one should always be careful and it is good for households to try to be frugal, especially when interest rates are so low - as they are gradually going to rise,"

He added, "I know that it is tough for people with small margins, but one should always try to have a small, small margin to have a sense of security."