No one could have prepared for the current situation which has unfolded, however, it has got me thinking a little more about our emergency fund or lack of it!
It is recommended that everyone in the UK should have an emergency fund saved, with 3 months worth of outgoings is the aim.
The purpose of it is to be somewhere for you to fall back on should the worse happen and you lose your job or you have an unexpected big bill to pay out for. If you have an emergency fund in place it is there to support you and financially take the stress.
It is a great idea in principle as it means you are not scratching around trying to find money or even resorting to borrowing money from family or on finance.
However what can you do to build an emergency fund if you are on a tight budget?
I am going to be completely honest here with you and tell you we don’t have an emergency fund as such. We have money put away which is for my tax bill and a little aside to pay things off that are due soon such as car insurance and MOT etc.
That money isn’t there for an emergency but building a pot to pay off our debts.
Currently, our focus has been to clear debts as quick as possible, I want to free up as much money as we can so we can clear debts as quick as we can. It’s not been easy and I don’t expect it to be easy for a few a while but the long term picture is the goal.
If like us though, you don’t have an emergency plan but want to start on on a tight budget, where do you start?
Here are ways to start building yourself an emergency fund if you are on a tight budget.
- Look at your budget and see if you can afford to put anything away. Even if its only £5 or £10 a month it’s a start and it’s more than you have done in the previous months.
- Have a clear out – not only good for the pot but good for the mind too! We regularly have a clear out of the bits in the house we no longer need. Simply pop them onto eBay or places like Facebook selling pages and put any money earned into the pot.
- Cut outgoings and save the difference – Have a look at your budget and see if there is any areas you can cut back on. For example, if you’re able to switch gas & electric suppliers and save a few pounds a month, move this saving straight into the emergency pot.
These are just a few suggestions on saving money whilst on a tight budget, do you have any other great suggestions?
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