1 in 4 worried about saving for a rainy day: top tips on how to boost your emergency fund

With a quarter of us worried about saving enough, Kate Anderson breaks down four top tips for boosting your emergency fund.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Jar filled with coins

Image source: Getty Images.

There’s no doubt that Covid-19 has made many of us view our personal finances differently. Whether you were hit hard by the pandemic or actually found yourself being able to save more, it’s likely you’ve been re-examining your financial situation. Perhaps you’re one of the many Brits to realise their emergency fund might not be big enough.

The Toluna Financial Services Sentiment Indicator found that when asked about their top five current financial worries, one in four respondents mentioned not having enough savings for an emergency fund.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

It’s important to have a little nest egg that you can dip into to cover unexpected bills. With that in mind, here are four top tips on how to boost your emergency savings.

[top_pitch]

1. Pay yourself first

It can be all too easy to leave putting something into your savings until the end of the month. But that means you risk spending that money and not contributing towards your emergency fund.

A good financial habit to get into is transferring a set amount into savings as soon as you get paid. You can even automate this by setting up a direct debit to come out as soon as your salary hits your account.

If you save a set amount each month, then you can build your budget around that. Then, not only do you have a really good savings habit, but you also slowly build up your emergency fund.

2. Maximise your returns

It’s safe to say that with interest rates as low as they are, this is not a savers market! But that doesn’t mean you should give up trying to find yourself the best deal possible.

The best type of savings account for your emergency fund in is an easy access account. These accounts typically have no limits on what you can pay in or when you can withdraw your money.

However, as a result, they tend to have some of the lowest interest rates around. This is why comparing accounts to find the best deal out there could make all the difference. Why not check out MyWalletHero’s list of top easy access savings accounts?

[middle_pitch]

3. Review your budget

If your finances have changed as a result of Covid-19, then it is probably time to have a look at your budget.

Having a budget helps you to avoid spending money you don’t have. By allocating your income throughout the month, you know how much you can spend and on what. 

Changes over the past 18 months may mean you need to adjust figures here and there. Treat it as a useful opportunity to think about the costs you have going out. For example, do you need every streaming subscription you have? Or now that things have reopened again, could some be cancelled?

If you can free up some money somewhere in your budget, then you could potentially commit a little bit more to your emergency fund each month.

4. Try a savings challenge

If you want to shake things up and boost your emergency fund, then you could consider taking on a savings challenge.

Doing something like a ‘no buy’ month could free up some money to put into your savings. Cutting out spending on eating out, entertainment and clothing is not sustainable over the long term. But trying it for a short period of time could really help with your savings goals.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »