What money are you going to fall back on in an emergency? An emergency fund is what you need. Personal Loans Now shows you how to build one in around the year tips.
Emergency Funds: Step to Step Guide
We all go through times when we need extra money for an emergency. Some people may turn to personal loans. For other people, they have built for themselves an emergency fund that saves them during this time. Personal Loans Now shows you 12 ways to build your emergency fund throughout the year so you have money to fall back on in a hard time.
This guide examines all aspects of your household and personal expenditure and shows you how to make savings throughout the year so that you wont need to turn to even best rate personal loans. You’ll find handy tips on:
- Why should you have an emergency fund?
- How much your emergency fund should be?
- Setting up your fund & your savings goal
- Month by Month Saving Tips
Why Have an Emergency Fund?
In the long-term, your own personal emergency fund can save you money. Instead of taking out expensive consumer credit like personal loans, you’ll have the cash put by for those unforeseen events and unplanned-for expenses that life sometimes throws at you.
How Much should your Emergency Fund Contain?
Ideally, your emergency fund should be sufficient to tide you over and cover your living expenses for 3-6 months. Obviously, you won’t reach this goal overnight so the sooner you start, the better!
Setting up your Fund & your Savings Goal
Work out how much you can comfortably put by. It should be enough to reach your goal but not too much that you struggle to make your financial commitments. This sum should be automatically put into a separate savings account as soon as your monthly wage comes in. Make sure that this account isn’t readily accessible but is available when you really need it. Keep track of your savings and if you see that the sum is too much or too little, adjust it accordingly. If you receive a bonus, commission or do overtime, why not put half by so you reach your goal all the faster?
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Build Emergency Fund Around the Year
Now, let’s consider ways you can reach your emergency fund within a year. Personal Loans Now, offering guarantor UK loans, shows you how just by putting every aspect of your household and personal expenditure under the microscope.
January – Reducing Accommodation Costs
Once you’ve come to the end of your fixed mortgage deal and you’ve built up your equity in the property, it might be the time to look around for a better deal by re-mortgaging. You can make considerable savings in your monthly repayments in this way. If you have a spare bedroom, weigh up the pros and cons of taking in a lodger. Although, it is important you check with your mortgage provider first.
If you’re in rented accommodation, you have fewer options to reduce your accommodation costs. You could consider down-sizing or move to a cheaper neighbourhood.
February – Cut Down on Energy Bills
When was the last time you calculated how much you paid for your domestic energy costs? Massive savings can be made by shopping around for better deals from other energy providers.
Simple measures like not leaving appliances on standby and switching off lights in empty rooms can also reduce your bills.
If you’re a home-owner, find out what in-expensive measures you can take to insulate your property to prevent heat loss. These measures will soon pay for themselves.
March – Economise on Grocery Bills
You could save a fortune by buying the ingredients to make home-cooked meals instead of opting for ready-made ones. If you’re pressed for time, make enough for several days and freeze the remaining portions. Although you should have a shopping list, be flexible and look out for special deals in the supermarket and plan your meals around what’s on offer.
At least once a week plan a meal around any leftovers which are left in the fridge so that nothing you don’t throw anything out. Take advantage of coupons. Also, consider buying supermarket brands instead of brand names for everything from cereals to household cleaning products.
April – Do You Need to Use the Car?
Petrol can often make up a sizeable part of your monthly budget so try to cut down on the use of your car. For shorter distances, why not use public transport, take your bike or go on foot?
To prevent more expensive car trouble later, ensure that you regularly service your vehicle. It is vital that you always check around for better deals when it’s time to renew your motor insurance. You also should ensure your car is not costing you too much in maintenance. Consider a car finance loan to reduce the expense of an old car.
If you aren’t a car-owner, see how much you can save by getting a season ticket. Also, check if you’re eligible for concessionary fares.
May – Looking Good on a Budget
Purchasing new clothes always makes us feel good but try to avoid buying on impulse. Before clothes shopping, check your wardrobe to see what you really need and stick to it. Buying in the sales or from reputable online outlets are both ways to reduce how much you spend on clothes. Go for classic styles that don’t go out of fashion too quickly.
You can find bargains for second-hand clothes on online auction sites, car boot sales and charity shops. Why not arrange a clothes swap with relatives and friends too?
June – Having a Great Time for Little Money
Of course, you want to socialise and wind down from the stresses of work by going out with friends. However, it’s very easy to overspend. Set yourself a budget before going out and leave all debit and credit cards at home.
Vary more expensive evenings out with cheaper alternatives. Arrange a get together at someone’s house and ask everyone to contribute a dish or bottle. Alternatively, you could rent a video and save on pricey cinema tickets?
July – Inexpensive Summer Holidays
Everyone needs a break from the grind of work and everyday routine. Be flexible about your holiday destination and try to pick up a last-minute package holiday. If money is tight, why not save on holiday accommodation by booking a B and B or going camping? Have you got family or friends in other parts of the country? If so, why not visit them for your summer holiday?
Staycations are becoming increasingly popular. You could check your local press for details of free local attractions and festivals and save a fortune on a hotel.
August – Re-Examine your Personal Expenses
Think about the amount going on your personal expenditure. Whatever your hobbies are, you can always find ways to cut down. Perhaps you could exercise in the park instead of renewing expensive gym membership. Alternatively, you could join your local library rather than buy new books.
When shopping for toiletries, replace brand-name products with cheaper alternatives and keep an eye out for special offers, coupons and free samples.
September – Saving on Back to School Expenses
September is often a time parents dread, but it needn’t be. One of the most expensive outlays is buying school uniforms. Ask family, friends and neighbours if they have any parts of the uniform their kids have outgrown. Contact the school to see if they collect and sell second-hand items. Only buy the essentials on the list and look in department stores and supermarkets rather than retail outlets for generic items like white shirts.
Before buying school supplies and stationery, see what you already have and buy the rest in supermarkets or pound shops. This way you will avoid pricier merchandise with cartoon characters and superheroes.
October – It Shouldn’t Cost Much to Stay in Touch
Have a look at how much you’re paying for your land-line, mobile phone and broadband connections. Are you really getting the most of your package? Look at your usage and check other companies to see if you can get a better deal which is tailor-made for you. Depending on your mobile phone usage, pay-as-you-go might be more suitable for your needs.
November – Changing Insurance Providers
When insurance policies are due for renewal, shop around to see whether you can pick up a cheaper deal with a different insurer. Check whether there’s a discount for bringing all your policies to the new insurer. If possible, pay policies in a lump sum rather than in instalments as you’ll be able to save money. Before taking out a new policy, check that it isn’t already covered in an existing policy; doubling up on insurance can be one of the most expensive mistakes you can make.
If you have any existing personal loans, debt consolidation may be the way forward for you. It allows you to focus on just one loan and pay only one’s loans interest and not more. If you are struggling with debt, contact debt advice services to help you sort out your finances.
December – Giving Doesn’t Mean Getting into Debt
Whether it’s Christmas or birthdays, we all want to show our loved ones that we care by offering them gifts. Instead of spending hundreds every year on presents, think of ways to economise. Perhaps you could put in a sum of money and buy a joint birthday gift from a group of you, or you could do a Secret Santa to cut down on expenses.
Instead of going for store-bought gifts, why not get creative? From baked goods to craft-work, there are plenty of ideas online about gifts you could make for any occasion; whether a birthday, Christmas or Father’s/Mother’s Day.
Our guide has shown you how easy it is to budget and economise on the key areas of your household and personal expenditure so that you’ll be able to reach your goal of an emergency goal in only a year. It doesn’t mean cutting out things that you enjoy like socialising or hobbies. It does entail examining and then changing your spending habits.