{"id":22057,"date":"2024-03-08T15:16:03","date_gmt":"2024-03-08T14:16:03","guid":{"rendered":"https:\/\/www.recharge.com\/blog?p=22057"},"modified":"2024-12-16T17:09:07","modified_gmt":"2024-12-16T16:09:07","slug":"emergency-fund","status":"publish","type":"post","link":"https:\/\/www.recharge.com\/blog\/en-gb\/ie\/emergency-fund","title":{"rendered":"4 tips for creating an emergency fund"},"content":{"rendered":"

An emergency fund is your protection against financial upheaval. Having this buffer helps you deal with unexpected situations. Things like medical emergencies, losing your job, or urgent home repairs. With this buffer in place, you can avoid getting into debt and enjoy greater peace of mind.<\/span><\/p>\n

This article offers actionable advice for building your pot of emergency money. We\u2019ll explore a range of strategies for bolstering your financial resilience.<\/span><\/p>\n

1. Set clear savings goals<\/b><\/h2>\n

Successful saving starts with a clear target and realistic monthly goals.\u00a0<\/span><\/p>\n

Your savings target<\/b><\/h3>\n

A sensible target for most people is to have at least 3-6 months\u2019 worth of living expenses in savings. So if your rent, food costs, and household bills add up to \u00a3900 a month, for instance, a good savings target is 2,700 \u20ac – 5,400 \u20ac or more. If you have dependents, a higher target may be more suitable.\u00a0<\/span><\/p>\n

Your monthly savings goal<\/b><\/h3>\n

Many experts advise saving at least 20% of your monthly income. However, this isn\u2019t feasible for everyone. Here\u2019s how to calculate your disposable income:<\/span><\/p>\n

First, add up your monthly expenses. Start with recurring payments (rent or mortgage, utility bills etc.). Next, check averages for things like food, transport, and nights out. Then subtract your total monthly expenses from your total monthly income. The number you get is your disposable income. Aim to save as much of your disposable income as possible.\u00a0<\/span><\/p>\n

2. Automate your savings<\/b><\/h2>\n

Automation is the best way to consistently contribute to your emergency fund. It eliminates the temptation to skip or redirect funds elsewhere.<\/span><\/p>\n

You can set up a standing order with your bank to automatically transfer a fixed amount from your current account to your savings account each month.<\/span><\/p>\n

Many high street banks also let you round-up day-to-day payments. This adds small amounts to your savings account throughout the month without any extra effort from you. You can look for this option in your online banking app, or try an automatic savings app like Plum or Chip.\u00a0<\/span><\/p>\n

3. Reduce expenses and increase income\u00a0<\/b><\/h2>\n

If you want to save more and grow your emergency fund faster, you may need to reduce your outgoings. Go through bank statements for the last few months and scrutinise your spending habits<\/a>. Ask yourself \u201cwhere can I cut back?\u201d Could you spend less on takeaways or dining out? Are you paying for any subscriptions you don\u2019t really need? Could you save money on energy by using the central heating less, or taking fewer baths? Divert any money you free up from next month onwards to your savings; update your standing order if you now have more disposable income to save.\u00a0<\/span><\/p>\n

There may also be opportunities to increase your income. You may want to consider taking on a part-time job alongside your main job for a while. You might also look for freelance projects you can work on in evenings or weekends. However, be realistic about your time and energy levels. Burning yourself out won\u2019t help you grow your emergency money in the long run.\u00a0<\/span><\/p>\n

A more viable way to increase income might be selling items you no longer use, or can happily live without. Platforms like eBay, Gumtree, Vinted, and Facebook Marketplace are great for this.\u00a0<\/span><\/p>\n

4. Use prepaid credit cards for safekeeping<\/b><\/h2>\n

Prepaid credit cards offer a secure and flexible way to store emergency funds. Unlike traditional bank accounts, they’re less susceptible to fraud and can be a disciplined way to save.<\/span><\/p>\n

Consider cards like<\/span> paysafecard<\/span><\/a>, which doesn\u2019t expire and lets you manage funds through a \u2018my Paysafe\u2019 account.\u00a0<\/span><\/p>\n

Start your emergency fund within seconds<\/b><\/h3>\n
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  1. Create a myPaysafe account<\/span><\/a> to start managing your paysafecard PINs.<\/span><\/li>\n
  2. Purchase paysafecard PINs. You can buy these from<\/span> Recharge.com<\/span>, an official partner of paysafecard, ensuring a safe and secure transaction.<\/span><\/li>\n
  3. Associate each PIN to your myPaysafe account. <\/span>12 months after the code is purchased, an administration cost of 3 \u20ac will be deducted from your balance.<\/span><\/li>\n
  4. In the future, you can use your paysafecard to make online purchases from any websites that accept paysafecard as a payment method. If you need to request a refund of your paysafecard, <\/span>fill in this form<\/span><\/a>. A refund takes up to eleven working days.<\/span><\/li>\n<\/ol>\n