Updated: Jan 17
Having a ‘rainy day’ fund i.e. emergency savings is important for our financial wellbeing. This fund covers unexpected costs that crop up like a leak in your roof, car break down, or even a job loss.
It’s a good idea to put aside some money each month ‘just in case’. But did you know that a third of people in the UK don’t have any emergency savings?
So, how much should you have set aside? A good rule of thumb is to save three to six months of your household expenses i.e. rent or mortgage, food, utility bills, car payments etc.
It is understandable that without a rainy day fund, many people worry about their finances. Let’s take a look at some statistics.
Financial worries cause…
26% of people to have sleepless nights
16% of people to be less likely to finish daily tasks
16% of people to have relationship problems
45% of people to feel anxious
How can you create your rainy day fund?
Set yourself a specific financial goal, write it down and put it somewhere that you can see it. For example, maybe you want to save six months worth of expenses by January 2023. Be sure to include a date so that you can establish how much you can save, and a set day that you will make the payment into your savings account (for example, payday). Standing orders can help with this.
Income protection and life insurance is something you should consider when thinking about your rainy day fund. If something unexpected happens that means that you are unable to work, income protection insurance will pay you a portion of your salary every month. These funds can be used to pay debts, bills, rent etc.
Life insurance will give your loved ones financial support should you pass away. It can help clear outstanding debts, pay the mortgage, and go towards bills and other expenses.
Get in touch with Kindred Estate Planning today for help with your insurance and protection needs.