Building an Emergency Fund
Whilst we are all trying to learn to live within a pandemic, it has given us an opportunity to get organised, and that includes with our finances.
Building an understanding of what funds you have available and where your money goes each month provides a foundation to start thinking about supporting your future should financial pressures arise.
Utilising the time in lock down to be proactive about our finances will also help towards creating long term good financial habits that could really make a difference to our long term financial health and wellbeing.
Assessing how much you need to protect yourself should a period of uncertainty arise, is the first step in starting that emergency fund.
House
Your emergency fund needs to include enough to cover your mortgage or rent, insurance and bills. If possible put aside a little extra that can cover home repairs.
Food
Estimate your monthly food expenses but cut back on non-essentials such as takeaways.
Debt Repayment
Plan for payments on credit cards and other debt. If possible take additional steps not to get out of debt, this will help avoid the stress of dealing with it should you find yourself facing financial struggles.
Childcare costs
This should include school fees, uniforms and lunches as well as any other committed, necessary costs.
Travel
Necessary costs that cover car payments, insurance and MOTS. If you can use public transport for necessary travel, such as to work, then the monthly cost of this should be calculated.
Insurance
This is to include dental, health and life insurance policies.
Personal expenses
Costs for clothing, hair and toiletries should be considered. However this should only include the essentials and not the luxuries.
Once you have calculated the overall monthly essential costs the next step is to plan a way to create that emergency fund.
Saving from each pay, whether that is weekly or monthly, will create a regular scheduled addition to that pot.
It should be recognised that saving is easier said than done, especially when there are temptations in the here and now, so think about ways to reduce these. Saving directly from your salary can help do this, entering our emergency fund directly without feeling the loss of transferring out of your own personal account.
The University offers multiple ways to save from your salary, just visit your engagement platform, Linc-On, to explore the options.
Now you know the amount, and how to do it, it is time to set a goal as to when you will achieve this by. It is important to remain realistic to ensure you stick to it. Setting smaller, short terms goals along the way can help you remain focused and provided senses of achievement.
For more ideas on how to achieve your financial goals visit our financial wellbeing site Life Choice.