With the news that many Brits are emptying their savings accounts, it’s more important than ever to understand why you need an emergency fund.
Ideally, you’d have this money set aside, but as inflation contributes to rising costs, household budgets are being squeezed.
Since the 2007 financial crisis the British public have face decreasing interest rates, causing a multitude of effects in this 10-year period. The infographic shown below lists a selection of these.
With many struggling, we look at rules that could help protect your income in times of need, so you are covered in times of crisis.
Ensure You Have 3 Months’ Worth of Savings
It is quite likely that you land up in a situation where you might not be getting your regular income. It would be a workplace issue, a disaster or something similar.
You should assess the current UK savings rates regularly to ensure you are not losing out to inflation.
Cover Your Income in Times of Illness or Injury
Some rely on their income protection insurance to cover any emergency situations, especially in terms of illness which can affect income.
If you are ill or injured for a significant length of time then this insurance can be invaluable to provide income whilst you recover.
Insurance small print can be complicated, as well as the time it would take to receive funds, so make you understand what kind of cover you have.
Calculate Your Net Worth and Monitor
Another important thing to remember in emergency situations is knowing the amount of assets you own.
This will help you to understand the best way to extend you the much-needed financial support. It could be the house you own, the amount of gold you own, vehicles you own and similar possessions.
Judging your total wealth also helps you understand the bigger picture as well as where you are spending the majority of your funds to plan accordingly.
Modern life needs planning if you want it to run smoothly financially.
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.