As careful as you may be with your outgoings, life doesn’t always go to plan. A car breakdown, a washing machine repair… sometimes large unexpected expenses can pop up out of nowhere. When this happens and you suddenly have to fork out hundreds of pounds, how does this make you feel? If you have no savings, it can be catastrophic. In these circumstances, you could of course apply for an online line of credit such as with Polar Credit who offer fast and reliable credit – you can apply online and there are no early repayment fees which is great if you can pay your loan off faster than anticipated.
In an ideal world, when a large unexpected expense arises, you will have some emergency savings which would mean an unexpected expense doesn’t need to be a disaster. Below is some advice on how to build an emergency fund.
How much should I have in emergency savings?
In an ideal world, we would all have 4-6 months’ worth of living expenses easily accessible in case the worst happened such as a job loss. However, even having as little as £1,000 tucked away can make a huge difference. Thrifty Chap writes about how 70% of UK adults only have £100 in savings – yikes!
Yikes! That still sounds like a lot
£1,000 might sound like a frighteningly large amount of money at first, but I’m going to help you build it up in just six months. All you need to do is put aside £5.47 a day for 183 days – that’s only six months – and come summer, you will have the peace of mind that comes with knowing that you are prepared for the worst financially.
How to build an emergency fund in 6 months
Cut right back on unnecessary spending
I’m going to tell you a cold hard truth: if you don’t already, you need to start living within your means. Download the last 3 months of bank statements and sort everything into categories. Really target areas where you can cut back and be ruthless. Speaking personally, occasionally I have subscriptions to monthly beauty/craft boxes that I just don’t need. I can also slip into silly habits like buying takeaway coffees (when I have a perfectly good coffee machine at home) or nipping into the shop on the way home and buying food that I don’t actually need. £5.47 a day for a week is £38.29. If you usually go out for dinner and drinks on a Friday, I’m sure you could swap to having nights in for 6 months to ensure you hit your target.
If you love buying clothes like me, why not save a fortune by pledging to only buy second hand for the six months.
I have lots of other tips on saving money here
Channel any ‘extra’ money towards your emergency savings
For example, you could channel all the cashback you earn towards your emergency savings goal. Or if you have any side hustles, you could aim to do the same for the income from these.
Another thing you could do it have a good clear out – most of us have clothes, furniture, toys and all kinds of other things that we haven’t used in so long. There is lots of money to be made on online selling sites.
Automate your savings
There are various apps you can use that will automatically move money across from your current account into your savings account. The benefit of this is that it takes zero effort on your part, and there is no temptation to skip a transfer. You can also usually set goals in these types of app which can help keep you motivated. Alternatively, you can simply just set up a weekly or monthly standing order to move money into your savings account.
If you are tempted to start burying your head in the sand and stop saving. close your eyes and try and visualise the feeling of dread that you would get if you got a call from the car mechanic telling you that the engine repair you need is going to cost £800. Or that your boiler has broken down and the part that it needs costs £300. Imagine not knowing how on earth you are going to to pay for either of those. Is that new pair of shoes that you are eyeing up worth having that feeling come true? Or can you wait until the end of the six months to splurge and do so knowing that you have a financial safety net in place?
You can do it! Six months will pass in a flash and you will be so happy you put in the effort to give yourself financial peace of mind.
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