We all need to think about the future. Now matter how well things are going today, we never know what the future has in store for us.
That’s why it always pays to think about planning for emergencies or things that might happen down the line.
This is the main reason that people start pension funds and invest in property. However, a pension or property is a long-term strategy. What do you do if you lose your job or have a financial emergency in the short term? Do you have an emergency cash pot you can call on in these types of situations?
If you don’t and you’re thinking about starting one, there are certain things you can do to help you save. Ideally you should have at least three months salary stashed away, although in the current financial climate six months might be better.
The key to saving for an emergency is to remember that this is money you should only use when the worst happens. If you keep dipping into it, then it will make saving incredibly difficult.
Set up a new account
By having a separate account, you can keep a close eye on your emergency funds. It also means you are less likely to borrow money out of it than if you keep it in your regular savings account.
Set up a direct debit or automatic transfer so that when your salary comes in, a part of it is automatically transferred to your emergency savings. That means you won’t be able to forget to do it one month, or feel tempted when you are physically transferring money to give yourself a little treat.
Give yourself a savings goal and do whatever you can to meet it. Turn it into a competition for yourself and reward yourself if you achieve and punish yourself if you don’t. This will give you some incentive to do it as best you can.
If an emergency crops up and you have no funds to fall back on, a same day loan is a speedy way to apply for the money you need to tide you over until payday. As long as you are confident repayments can be made quickly, this can be a useful option in desperate times.