When you divide your money each month, satisfying all your financial obligations (or as many of them as you can afford), there isn’t always a lot left over for savings. As a result, your household emergency account may not be fully funded. Though it can be hard to set by money for emergencies, living without adequate savings leaves you vulnerable, when unexpected expenses arise.
People need money in a hurry, for various reasons. In some cases, payday loans from online lenders are all that’s required to clear financial hurdles. For other UK families, credit cards are the fallback financing option when expenses mount and earnings fall short. Another group of households are well-equipped with emergency reserves, drawing on their own rainy day savings to meet financial problems head-on.
Regardless of which group shares your present financial outlook, there’s a strong case to be made for moving into the class of UK consumers with a stash of cash reserved for household emergencies.
Are You Ready for a Rainy Day?
Not only will you save money on interest expense, compared to reaching for your card, but a rainy day fund is also good for your peace of mind, knowing resources are available when spending crises occur. If you need another motive to establish savings for unexpected expenses, consider these good reasons to have an emergency fund.
- Your Rent’s On the Up – You never know when your landlord might decide to up the rent. A household emergency fund can help you manage the increase – even on short notice. Without money in reserve, you may not be able to make ends meet when your rent’s on the up.
- A Friend Needs Help – If you’ve ever let someone help you during a hard time, you understand the value of a leg-up from a friend. Emergency reserves are earmarked for unexpected expenses, which may extend beyond your household. It’s important to remember that any of the financial problems that can set you back, can also affect your loved ones. Your emergency savings may someday provide a lifeline for your family, but the resources may also be needed by someone close.
- A Relative Falls Ill – Families’ members are commonly spread far and wide, so visiting a sick relative may entail more than a trip across town. If you need time away from work or must travel on short notice, you’ll appreciate a well-funded rainy day account, standing ready to help you get to your loved one.
- You Lose Your Job – More than any other financial setback, losing your job undercuts your whole financial flow. Without money put aside for such emergencies, your final paycheck is all that stands between healthy household finances and complete monetary meltdown. Experts advise saving six-months’ worth of customary expenses into an emergency account, which can keep you afloat while you look for work and get some earnings flowing.
- You’re Moving House – A well-planned move includes time to prepare. But what if you’re asked to move for work or must hurriedly leave your home for another reason? Unless you have a nest egg to draw from, moving expense may pose a financial problem.
- The Family Car Gives Up – Personal transportation is a tremendous convenience, but it comes with a price. Your car might require repair or replacement at any time, so it’s a good idea to maintain emergency reserves, in order to cover car costs out of the blue.
- Energy Costs Increase – Heating and cooling expense can bloat your budget, particularly when weather conditions or raising rates work against you. When a cold winter has its way with your energy bill, emergency savings ensure you’re never left out in the cold.
If there’s one thing you can expect from your family finances, it is unexpected spending demands. Don’t get caught out next time a financial challenge threatens your lifestyle. Instead, turn to your emergency savings for immediate relief.