Your stash for the unexpected
You can’t always know what’s around the next corner. So it’s important to make sure you’re ready for the unexpected. That means making sure you’ve a savings stash to fall back on.
Every day we’re faced with the temptation to spend our money and before you know it, you’ve gone from one pay packet to the next without having saved a thing.
Without that savings buffer to lay your hands on quickly, you could find yourself up the creek without a paddle when an unexpected cost arises.
How might you cope for example with a large bill like car insurance or school fees? What about a leaky roof? What if you were unable to work due to illness or job loss or you found yourself having to help out a family member in need of financial support.
Rule of thumb
The rule of thumb is that you have at least one to three months expenses saved up for the emergencies life may throw at you. Think of the peace of mind you’ll have too if you can put this plan into action. You’ll never be caught unawares.
How much is enough?
Knowing how much to put aside really comes down to how much you spend week to week and how many people rely on the financial security you provide. Think about things like:
- Your day to day living expenses, from groceries to bills
- Regular repayments on your mortgage, loans and other debts
- Your insurance cover and when you can access it
- Whether you are the sole income earner for your family
- Your other sources of income, such as investment
Time to make a plan
- Dissect your spending: Check what you’re spending month on month, you’ll soon start to see the things you’re wasting money on.
- Find a budget buddy: There are lots of free budget apps available or try out our handy calculator.
- Pay yourself first: You rainy day fund will live and die by this. So make sure you set up a direct debit to consistently make that deposit to your GoalSaver Account as soon as you get paid.
- Give it a value: Set a goal. Goals are motivating, so work out a specific figure for your rainy day fund. Then set yourself a time limit for some extra motivation.
- Allow for the odd luxury: Saving is hard. But it doesn’t have to make you miserable. Allow for the odd luxury buy, without going too mad.
- Forget about it: Rainy day savings are a long term thing. It’s more about making sure that there’s money being put by than actively watching it grow. So set it all up and leave it do its thing.