We’ve all heard the phrase ‘expect the unexpected’, but how many of us are actually prepared for life’s ups and downs?
Saving money for big moments in life is key to handling your money well. Whether you’re saving for something special like buying a house or a wedding, or just want to be ready for surprises, having some money saved up gives you a great start.
In this blog post, we will discuss why it’s important to have a savings fund for life’s events and emergencies, as well as provide some practical tips for saving effectively.
The importance of having an emergency fund
Surprises and emergencies can happen without warning, and having money saved can help soften the financial blow. For example, if your car breaks down or you need to fund a household repair, having savings aside can reduce the stress and worry associated with these situations.
You may have heard of the importance of having an emergency fund – and for good reason. If you were to lose your job or take time off for another reason, could your savings support you?
If not, think about creating an emergency fund to act as a cash buffer should you need it. This fund should be easily accessible, allowing you to withdraw funds quickly when needed. The recommended amount for an emergency fund is 3-6 months of living expenses, but you can start with smaller goals and increase the fund over time.
While having savings can’t always fix a problem, it often provides more options and goes a long way to providing peace of mind.
Planning for life’s big events
Saving money isn’t just for getting through tough times – it’s also great for paying for happy occasions! Think weddings or a big holiday. By setting specific savings goals and creating a plan to reach those goals, you can cover these events without going into debt.
Alternatively, you may be planning an exciting life milestone, such as buying a home, having a baby or retiring. Milestones like this change your financial circumstances on an ongoing basis, so you will need to consider both initial costs and ongoing expenses.
As we continue to live through the cost of living crisis, having money set aside is especially crucial. With rising inflation increasing the cost of everyday items, we all need to do a little more to stay on track.
Where to save?
Your savings fund should be kept in a separate savings account so it doesn’t get mixed up in your current account or with other savings pots.
Make sure it’s an account you can access easily if you need to make a withdrawal at short notice.
In uncertain economic times, you might want to put your money in a ‘safe’ place like a cash account. However, you should look for an account with a good interest rate instead of holding large amounts of funds in a current account. This is important as while having access to your money provides peace of mind, keeping all your money in cash could erode its value over time.
Thankfully, there are options available that provide both access to money and a good level of interest, so you can boost the value of your money over time.
10 effective saving techniques to secure your financial future
Saving money for life’s events can be challenging, but with discipline and determination, it can be done. Here are some effective saving techniques to consider:
1. Set goals: start by identifying your savings goals and break them down into smaller, achievable targets.
2. Track your spending: keep a record of your expenses to identify areas where you can save.
3. Cut unnecessary expenses: look over what you spend money on and cut out things you don’t really need. Costs for things you don’t use much, like gym memberships or streaming services, could go into your savings instead.
4. Avoid impulse purchases: practice self-control and avoid impulsive purchases, especially those that are not in line with your savings goals.
5. Establish a budget: create a budget and stick to it, allocating a portion of your income towards savings.
6. Put away extra money: if you come into some money like inheritance or a tax rebate, think about putting some or all of it into your savings.
7. Join a savings challenge: participate in a savings challenge, such as saving a specific amount each month or avoiding unnecessary spending for a week.
8. Avoid debt: pay off high-interest debt as quickly as possible, as interest payments can drain your savings.
9. Automate your savings: a good strategy to keep adding to your emergency fund is to arrange for a set amount of money to automatically transfer from your checking account to your savings account every payday.
10. Be disciplined: achieving savings goals doesn’t happen without effort. You may need to be prepared to make certain sacrifices along the way. But when you reach your goal, it will be worth it! The more you can save up the better, as having more set aside will increase your feeling of financial security. However, any amount you can start to build up will make you feel better and start to ease the worry of a sudden financial setback.
By following these saving techniques, you can gradually build up your savings and place yourself in a more secure financial position to be able to afford life’s big expenses.
Start your savings journey today
Saving money for life events and emergencies is an essential part of financial wellbeing. By establishing a savings fund and planning ahead for major life events, you can ensure that you have the financial means to handle unexpected expenses and create memorable experiences. Remember, saving is a discipline that requires dedication and commitment, but the reward is a more secure financial future.
As always, we’re here with you on every step of your financial journey. Our Member Saver is a great option to use for your emergency fund because you can make unlimited withdrawals without notice, and you can add to your pot by direct debit, standing order, or lump sum transfers.
When you save with us, every April you’ll be eligible for a dividend payment. All of your deposits (up to £85,000) are protected by the Financial Services Compensation Scheme.
Find out more about our savings accounts here and access more useful tips and resources to manage your money better on our website.