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An emergency cash fund helps you in staying prepared for a rainy day. A majority of our citizens don’t even have 1000 pounds in cash savings in their bank accounts. As a result of this, they remain clueless about their finances and don’t even have a small deposit to depend on. Even a small medical emergency could ruin their lives.
The good news is that there are companies like https://www.paydaypixie.co.uk/ which can provide quick loans to anyone in need. If you are at least 18 years of age and employed (even part time) you could avail a loan in minutes. Funding is also available to people with no credit or bad credit. You never have to worry about formalities too.
However, the ease with which these loans can be availed is not an excuse for having zero savings. Here is an emergency fund guide that will help you maintain a big bank balance and get steady, interest-free cash whenever needed.
Creating a separate bank account
Create a new bank account, preferably the one which comes with less frills and a high interest rate. You won’t have to make too many transactions with this account. Therefore, even the most basic account types will do. It is impossible to save when you have just one account. Eventually, you will stop keeping track of your savings. Moreover, you will be able to get a clearer picture of your finances too.
Deciding the goal amount
Creating an emergency fund goal is a much better way to save. It will keep you motivated and give you a fair idea about your financial health. In general, you should keep at least 6-month expenses in your account. It isn’t necessary to count all your regular splurges in this number but if you want, you can add those too. The best thing to do right now is to ensure that you can live a good life if you lose your job tomorrow.
These expenses will also be useful in case you ever come across a medical problem. The money could help pay for deductibles, co-pay, and advances till the time your insurance coverage kicks in. If you don’t have coverage, then this fund will be even more useful. In this case, you could aim to build up 12-month expenses.
Saving every month
Make sure you save at least 10 percent of your income and divert it directly to your savings account. You can also use the auto debit facility to transfer funds to your savings directly after receiving your salary. This will help you in saving steadily each month.
With just a few months of saving regularly, you will be able to maintain a good bank balance. Ensure that your bank also provides you a good interest rate, so your savings could grow with time. Compound interest will help you in creating bigger and better savings, over a period of time. As the amount grows larger each month, you will feel proud of your budgeting and financial management abilities.