The Health of Your Rainy Day Savings

Did you know that only 63% of adults could afford a 1000€ emergency expense, while less than 50% have three months' worth of savings set aside, and 22% have no savings at all. Which group do you fit into?

It is all too easy to live from month to month and spend your entire salary.

We can say the cost of living is high, inflation is high, and everything just costs more. But where do you draw the line? Will an emergency or unfortunate incident force people to save money for a rainy day?

Why is a rainy-day fund necessary?

A rainy day savings account is vital for emergency expenses. Let’s ask these questions.

Can you afford a major repair on your car?

Do you have the money to pay for unforeseen medical bills?

What if your pet falls ill? Can you afford the expenses of a vet?

What happens if you lose your job or get made redundant? Can you support your family financially?

Who will pay for your children’s schooling?

What happens if your partner loses their job?

Can you afford repatriation costs if a family member passes away abroad?

A rainy day or emergency fund reduces financial anxiety and gives you peace of mind knowing you are covered in a financial emergency and won’t need to take out credit.

How much should you have saved in an emergency savings fund?

The general consensus is that you should save at least three months’ worth in an emergency savings account. Others say as much as six months.

Why is it so difficult to save?

Times are tough, and it’s difficult to budget with rising inflation and interest rates. The cost of living is increasing, and your cash doesn’t have the same spending power it used to have.

Despite this, we are often the villains in our financial journey to savings. People love spending money. We have this innate need to spend the money in our pockets.

▪ Cost of living increase – Things cost more, and we must spend more to get the same. This alone reduces your overall disposable income.

▪ Online shopping – the convenience of the modern professional but also a danger!

▪ Impulsive buying – How often have you gone to a shops and bought things

HELEN BOOTH

impulsively and swipe, swipe, swipe later, you’ve spent £200 on nothing really?

▪ No budget – Even the most affluent of professionals need a budget. It is very easy to break the budget if you don’t keep track of spending, no matter how large your disposable income portion is. Imagine if you saved that, what you could buy with it.

▪ No separate bank account for saving –Separate your savings account from your transaction accounts. Arrange for a direct debit to your savings account when you receive your salary, and keep the attached debit card locked away if you receive one.

Savings apps like Catalyst let you invest in diversified funds without monthly contributions or when you have extra cash.

▪ High debt – The plague of the modern professional is debt. It is so easy to take out debt to pay for things or to swipe a credit card. This is the quickest way to ruin your disposable income.

Your financial advisor can help you budget and start a proper savings plan.

What can you do to increase your emergency savings?

Monitor your expenses –Keep track of your disposable income spending, and you will be surprised how much you have wasted over time.

Direct debits for your savings – Pay yourself first before spending; this way, your rainy-day fund can grow.

Create a disposable income budget – Even the wealthy need a budget for their day-today spending.

An emergency savings fund is vital to cover unforeseen expenses and help ease financial stress when significant life occurrences happen. Your wealth advisor can help you access savings solutions that earn interest and give you peace of mind knowing that when an emergency occurs, you are covered financially.

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your independent financial advisor for a personal consultation. * No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.