Life is full of emergencies! So, one of the most highly recommended tenets of personal finance is to build an emergency fund. You may be wondering why exactly this is so important so let’s review:
Murphy’s Law. Murphy’s Law says, “Anything that can go wrong will go wrong,” and it is a good reason to build up some cash savings. There are many, many things in life that that can catch you by surprise and cost you: illness, traveling for a funeral, a car accident, and bad weather. Having cash readily available to handle some of these things can help make life that much easier during a difficult time.
You could lose your job. Many expenses, such as car repairs and small medical bills, can be covered as long as you have another paycheque on the horizon. However, if you unexpectedly lose your job, paying these bills on top of your other regular expenses such as rent, a car note, and utilities can become impossible. In a worst-case job loss scenario, having a cash cushion will help you weather the storm and literally buy you some time to figure out a plan of attack.
It is typically recommended that you aim to build three to six months of expenses but really, even a small stash of £500 – £1000 can help. One tip is to take any money you save and put it in a separate account that isn’t too easy to access. That way, it will be there when you need it but you won’t find yourself borrowing from it for anything but emergencies. And if you do end up needing your emergency fund, just remember to rebuild it once you are back on your feet!
QuickQuid.co.uk is the premier online provider of short-term loans in the United Kingdom. Its quick, convenient services have helped over half a million Britons bridge the gap between paydays from the comfort and privacy of home.