There are many people that like to have some money tucked away for emergencies. It is a good idea to have a think about the advantages of doing this. There are many possibilities such as having money to replace something that breaks, to pay an unexpected bill or to cover costs if you lose your job. These things cost quite different amounts of money and so it can be tricky to know exactly how much you should have put away for emergencies.
A few Hundred Pounds
It can be worth putting a few hundred pounds behind you if you can. This will allow you to have enough to pay for an unexpected bill or to replace a white good that breaks with something cheap or second hand. This should be a bare minimum amount as if you have two expenses at once you will not have enough. However, this can be a good amount to aim for to start with so that you have a bit there. But you may want to try to make it even more if you can. Alternatively you could look to payday loans in the UK for your borrowing needs.
A Few Thousand Pounds
This amount of money will allow you to feel a lot more secure. It means that if you have an insurance renewal you can pay it yearly instead of monthly or if white goods need replacing you will be able to buy quality one. It will be important though, to make sure that as you spend money from your savings, you replace it as you can afford to. Then you will be able to use them again if you need to in the future.
Six Months Outgoings
Some people like the idea of having six months worth of outgoings available in their savings in case they lose their job. This will enable them to take their time looking for something and finding the right job and not feel pressured into getting the first thing they come across which might not be totally suitable for them. It also means that if there are not many jobs around, they will be able to wait until there is a but more to choose from. It can really help you to feel like work is not so bad, if you know that you have an option to leave, because you have the money behind you so that you can still cover all of your bills if you do walk out or hand your notice in.
As Much as Possible
If you can continuously add to your savings, then this can be useful. It means that you will be able to build up that stash of money and you will be able to cope if you are out of work long term, have a selection of emergencies or just want to dig in a treat yourself to something like building work on your home. It can be worth thinking about whether you want to set up a transfer each month to save some money so that you are always adding to that account and making sure that your saving increase or that they are replenished when you spend them.
If you are working hard on building up savings do make sure you put them in an account with a decent interest rate. You want to make sure that you are getting as much as you can as it will be a bit of free money for you. The accumulated interest, will then get interest paid on it, which is called compound interest and it can make a big difference to how much interest you get, especially over the long term.
