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How will YOU avoid a financial emergency?

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Have you ever wondered how you would manage financially if you were to lose your job or get landed with an unexpected (and unwelcome) bill? An emergency fund could potentially provide a “buffer” against prolonged financial struggle until your personal situation improves.

The amount needed will obviously vary from person to person, but a practical recommendation is roughly 3-4 months worth of income stored away to help you pay for essential living costs.

Occasionally you might have a pre-conceived idea that you’re about to face a financial headache (maybe that the car is destined to fail its M.O.T) so it can be wise to have an emergency fund in place to cover any costs you think this might incur.

You should also look at policies you have such as Income protection. This could be a cost effective way of helping to pay some of your outgoings without having to resort to a potentially expensive loan.

How much can you reasonably afford to save?

Putting your finances under scrutiny can be a sobering thought. Analysing our spending habits can highlight aspects of our financial planning that make for uncomfortable reading, but perseverance is paramount.

Creating your emergency fund doesn’t have to be a sprint; think of it more as a marathon and prepare for it to take a few months (or even longer) to get it to a level that you want it to be.

Think about your outgoings – can you getter a better deal on your mobile phone/utilities bills/insurances? Even a slight saving means extra funds to plough back into your savings account.

Having a separate, dedicated savings account is an excellent way of making sure the money you have earmarked for savings stays that way – removing the temptation to spend it or watch it mix with your regular account with no discernible idea of what you’ve saved, can make your task easier in the long run.

Above all, don’t treat saving as a chore. This is an investment for your future, so focus on the added security it could give you when times get tough!

If you want to discuss this subject in further detail, Clayton Holmes Naisbitt would be delighted to talk with you in a free initial consultation. Call our office on 0113 3878240 today to arrange an appointment.

Clayton Holmes Naisbitt