Emergencies will never knock the door before entering your perfect life. You have the perfect job, the most amazing woman/man in your life and the house is a dream! What if you lose the job? What if the ex-wife asks for all your assets? Let’s not forget that not every business is successful!
Look around you! Everything is expensive – petrol, diesel, food, rent, maintenance costs, and medical bills. While our endeavor is to stay positive, but one has to be ready for those emergencies.
Consider it a bag full of money that you use when there is nothing left! This is the sum of money that is readily accessible when things go haywire.
You may think, ”Oh! I would never need any emergency fund. I’m a wealthy person. Nothing can ever happen to me!”
We love this positive attitude, but we are also a good financial planner. Disasters CAN happen! You must be prepared for them. It would be a blessing if nothing goes wrong! Better still, you can use that money to invest in a property. But, our suggestion is to always be prepared for the worse.
Here’s a quick post that talks about the relevant topic ‘SAVE FOR THAT RAINY DAY’. It basically means that emergencies and crisis are the rainy days of your life. This is when you need a shield – an umbrella to stay safe. Consider the emergency funds as your umbrella or the raincoat. This will keep you safe even during crisis period.
Our job is not to burst the bubble of your happiness, but the whole motive is to prepare you for the worse. One should live life with a positive attitude, but being a good financial planner is necessary.
Here are some reasons to save for that rainy day:
1. Is your job secure? Think twice!
Your job is fantastic and it pays you extremely well. However, it may not be permanent. In UK, the retirement age is 65 for men and 63 for women. Even if you do not lose your job till 65, you will lose it eventually. Think of your retirement! In case you lose your job and the company hires someone new, you would need some emergency fund to raise your family and pay the bills.
It is a wise idea when you have enough money to pay the bills for the next 3-6 months. In due course of time, you will find another job or win the lottery. Do not rely on the latter one!
2. Medical Emergencies
While we want you to stay hale and hearty, anybody in your family could have medical emergencies. These days Corona virus is spreading across the globe. Your wife may be pregnant and her labour pain could arise anytime! There are too many medical conditions that require immediate treatment and attention. It could be a sudden heart attack, an accident (we don’t plan accidents, do we?), and even a rise in the blood pressure level. In such cases, you would need to rush to the emergency room. That’s precisely why you need to fill your basket with eggs. Be prepared FINANCIALLY and mentally.
3. Honey, the house needs repair
Your house is beautiful, but there are certain maintenance costs. When the wall paint starts chipping and the chimney is not working efficiently, you would need to repair it. Even if you have wallpapers installed, it requires changing in 3-4 years.
These are costs you cannot turn away from! The good news is that you can get a personal loan for fixing your home! You can repay the loan and get your work done immediately.
Anything could go wrong in your home! You must be ready for these sudden expenses. The bathroom is a corner where anything could go wrong! The shower is not working or there is a leakage. Just be prepared for the worse!
4. Car Troubles
Your car is a machine! Even human beings require maintenance. You head to the salon to fix your hair, face and feet. You need food, water and regular check-ups. Similarly, your car needs maintenance.
There is a very good example of a house and the light bulb. When the light bulb goes out, you change the bulb. You do not change the house! Do not shy away from your duties. If the car is asking for repair, do not think of buying a new car. Instead of buying a new one, repair the old one.
If your car is too old, then it would be wise to take a car loan and buy a good one. Make sure you are choosing the best loan lender.
5. Sudden Travel Plans
Travel plans could arise anytime! Let us say your sister is giving birth to a child and you have to rush. Your client is traveling to London and you have to follow him to get the deal done.
There could be many travel plans! You just have to be prepared for these emergency travel situations. It could be a funeral, your girlfriend’s birthday, a visit to your long-distance boyfriend, a sudden marriage proposal or even your mother’s birthday. These are situations that you cannot miss or turn your back on.
Key is to save money in your emergency fund and DO NOT RELY ON PLASTIC CARDS. Credit cards are toxic! Use them for smaller expenses like buying a dress or groceries. Never use it for emergencies.
Some day there will be a torrential rain outside your door. What would you do? You would rely on the emergency fund. Now let us think of the solutions that could help us save more.
You may be a spend-thrift, but everyone can save a small sum from their earnings. Let’s check out the ways you can save more money!
1. The Money Jar
Remember the piggy bank from childhood? Parents gave us a piggy bank to learn the art of saving money. You would gather all the money that you got in a piggy bank and open it when it was full. Whenever you make a payment at a store, save the change and put it in a money jar. This may sound funny to you! Let’s do the math – even if you put £3 a day. It will be £90 a month. £90 a month is £1080 a year. That’s not a small amount for sure!
You can save more! Some days you can put £3 and some days you can put in £5. It is a small amount!
2. Boot sale is ON
Old is gold! You may have old clothes (in good condition) that you would want to sell. Put a garage sale and sell it to your neighbours or anyone who needs the clothes, shoes, bags, and even stationery.
You can hold the garage sale on a weekend. Head to your bedroom and see all the things you do not need! It could also be a piece of furniture.
3. Dinner Dates at Home
Instead of going for a fancy dinner every weekend, spend the time inside your home. You can do a candle-lit dinner at home. Isn’t it warm and comfy inside your covers? Make a tent inside the home with fairy lights. This could really enhance the look of the room. Plus, it is a romantic thing to do with your partner.
Think of the money you are saving! An expensive dinner could cost you about £100-£150. It is best to save that money and put it in the emergency fund.
Also, you can skip going out for coffee. Invite your date to your place for a coffee. You can talk for hours and one thing leads to another. That’s a good financial as well as dating advice, no?
4. Always Pay in Cash
Skip paying with your credit card. Youngsters have a habit to show off wealth. When you are paying with plastic money, you have to think of the money that you have to return.
How will you return it? If you do not want to get into debt, pay with cash. This will help you save money! When you use cash, you are much more cautious about spending it.
These were some tips and ideas to save more money for your emergency fund. You can do that through multiple ways! Having a separate account for your savings will also help!
You must have more control over what you are spending on! Please note that earning money takes a lot of hard work. Of course, you want to buy the latest gadget and go on fancy dinners. Limit the fancy dinners and buy the gadget you like. However, save a part of your salary in the emergency fund.
In case you have an emergency need, take a loan. There are many loan shops in UK. This is where you can get a loan from a lender! Choose the right loan shop!