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.
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.
