I read recently that something like 70% of UK adults have less than £100 in savings. Whilst financial stability isn’t at the top of everyone’s to do list, what do you do should you need money in an emergency? How much emergency cash do you have?
Why Would You Need Emergency Cash?
Emergency cash might be needed for any reason. Emergencies aren’t usually planned, they crop up when you least expect them and you are thrown into chaos. It could be a simple thing that you simply need emergency cash for, like breaking your phone and needing to buy a replacement. It could also be something horrific like a friend or family member dying in another country and you having to jump on a a plane. Critical house maintenance, car crashes, bailing out a loved one, the list goes on. An emergency cash fund will stop you even considering turning to a pay day loan.
How Much Do You Have?
As stated above, the article I read stated that somewhere around 70% of adults in the UK have less than £100 in savings. I personally know people who have zero savings and live pay cheque to pay cheque, which is quickly eaten up by bills and feeding the family. These are people with two working members of the family, in full time employment. If they can’t find a way to add to their savings, how can you?
What Do I Have & What Do You Need?
My work is never secure but I wouldn’t ever return to a corporate job. That’s a story to delve into another day. This doesn’t stop me realising that I have to fund some sort of emergency savings account, should something happen. With my self employment life, what if it all fell on it’s face? What if it all went wrong? I have a young family to support and a mortgage to pay. This is why I’ve funded my emergency cash pot with what we’d need to survive for a minimum of six months. That includes mortgage payments, bills and a reduced weekly food budget. This is the minimum I would suggest. Ideally I want to have a years worth of survival money in our emergency cash fun. This would then cover anything extra on top of that minimum of six months I suggest. Things like car payments and so on.
Create Your Emergency Cash Fund
So how can you actually create your emergency cash fun? To start with, open a separate savings account. Ideally you need an easy access savings account so in an emergency, you can get your money instantly. The best easy access savings account at the time of writing this gives you 1.35% interest. A quick online search at the time you’re wanting to open your new savings account will give you the best options for you. After this is set up, simply start funding it. A good idea is to pop 10% of every pay cheque into it until it gets to a point where you’ve hit that minimum of six months worth of emergency cash. This will cover you should you lose your job but don’t stop there, keep funding it incase you get lumbered with an unexpected bill or indeed, need to travel somewhere quickly for a family emergency.
What Are You Waiting For?
Set up your savings account today and set up an automatic transfer from your current account to start funding your emergency cash. You never know when you might need to dip into an emergency fund but if you don’t have one, you’ll be scrambling around instead of focusing your energy on the emergency at hand.
