Emergency fund

Just when you thought it was all going well, life has the habit of biting you where and when you don’t expect it.  Having financial reserves or insurance can help smoothe out the bad times.  That’s why, if you invest with us, we’ll ask you to have a suitably sized emergency fund.  The reason we do this is twofold.

Firstly, we’re not in the business of simple buying business that’s unsuitable, and secondly, it makes good sense for all our clients to be financially resilient.  Think back to the Credit Crunch when no one had savings.

Financial emergencies can crop up when you’ve lost your job, if the boiler stops working, if the car engine goes pop, mortgage rates shoot up – it could be anything. The last thing you need to be doing then, is relying on expensive credit cards or payday loans.  Much better instead, to be dipping into your emergency funds.

We think that you should keep between three and six months worth cost of living expenses, depending on your own situation and whether or not you have income, debt, children, debt or suitable insurance.  If you currently don’t have an emergency fund or find it difficult to save, the key is to start small.  But remember, saving just one month’s worth of expenses will take some time, let alone six times that much.

Keep it in a place where you can get at quickly in the event of an emergency.  Whatever you do, don’t invest it market volatility could mean you lose money in the short-term just when you don’t need it.  A good way to do it is to open up a new savings account if you don’t have one and begin to save with it.  Make regular deposits into it, and stick to it.

Once you start, the chances are you’’ forget all about it.