Emergency Fund: You need one in your budget!

This past year has been tough for everyone and if there is one thing I have learned from 2020 is how important it is to have an emergency fund!

You never know when an emergency can arise, whether it’s your car or home repairs it can cost a lot of money which you don’t have spare.

2 years ago I was in a car accident, I was fine but my car wasn’t! The repairs on my car cost over £1,000 and I did not have this money saved. Which meant I had to put this on my credit card which left me in debt.

Since then I have learned my lesson and I now have an emergency fund, it isn’t fully funded but I am in a better position than I was 2 years ago.

Unfortunately, no matter how much you prepare you can never avoid emergencies and having an emergency fund is one of the best ways you can avoid using your savings or even getting yourself into more debt.

What is an Emergency Fund?

An emergency fund is money that you set aside for emergencies, this money isn’t used to buy yourself clothes etc it’s for emergencies only!

This fund shouldn’t be used as a long term saving pot, but rather one that you treat as a safety net, so don’t be tempted to dip into it.

During the pandemic my emergency fund has helped so much, I had to get my car repaired a few months ago and having this money available allowed me to pay it off without having to use any of my savings.

I get so many questions about if I think this fund is worth it and the simple answer is yes! When you are starting out on your budget it will help you so much so I can’t recommend this enough.

How much do I need in an emergency fund?

According to www.bbc.co.uk from their report in March 2016, it is recommended that you have between one and two weeks take home pay as buffer. This is roughly £400-£800. However an emergency fund should allow between 6-9 months of expenses which is roughly £1,000 a month. (See quote bellow)

“It recommends keeping between one week’s and two weeks’ take-home pay as the buffer. Translated to the UK, this would mean saving between roughly £400 and £800. An emergency fund should allow for between six and nine months of expense, it adds. If these were to come to £1,000 a month, that’s between £6,000 and £9,000.”

At the moment I aim for £1,000 to cover repairs and expenses on my car. I live at home so I am in a lucky position and I do not need to that much money. However, next year my boyfriend and I are planning on buying a house.

So we are going to start building up our emergency fund in January when we work out how much on average our expenses are going to be.

I would recommend starting small, with a few months’ worth of expenses before you build up to 1 years’ worth.

Where should I keep my emergency Fund? Cash or savings account?

It is entirely up to you! But your emergency fund needs to be easily accessible. Don’t leave it in an account that you can’t access.  

My emergency fund is in a savings account in my bank account, I am able to withdraw the money within seconds and use it.

However, you will need to have some self-control and not use it for just anything.

For me this fund is at the bottom of my homepage on my online banking, it’s easy to access but it is not something I can see all the time.

When should I use my Emergency Fund?

The only time you should remove money from this fund is for emergencies, not to pay for clothes, holidays or nights out.

It’s used for home repairs, car repairs and paying bills if you lose your job or some of your income.

It is difficult to decide what an emergency is, but the way I view it, if it’s something that you need in order to survive or get to work then use this fund. But this doesn’t include buying shoes, clothes and makeup.

But don’t be afraid to use it if you need it!

How Do I Save For My Emergency Fund?

The most important thing is to create a plan to decide where you want to start. You need to determine how many months you want to be covered.

The best place to start is with one month, write down all your essential bills and expenses. Once you have this figure you can decide how much you’re going to save each month.

If you have lost your job or have your income reduced then you may have to make scarifies and remove your favourite entertainment subscriptions to pay for your essential bills and expenses.

Essential bills and expenses:

  • Mortgage/ rent
  • Heating, Water, electric
  • Car insurance
  • Council Tax
  • TV
  • Insurance (Life, home etc)
  • Groceries (toiletries etc)
  • Petrol

There are many more but this is just a brief reminder.

One thing to remember is that you need to build this fund up quickly, so it may be worth slowing down other savings goals whilst you build this up.

Always set up and instant bank transfer and include it your monthly budget. For my fund I put £100 away each month for me this is enough but I know when we move I will need to up this.

So What Are You Waiting For?

Imagine what it will feel like having a fully funded emergency fund! It is a great feeling, when an emergency arises you will have the money their ready without effecting your savings or putting you in more debt.

I would recommend starting this fund before you starting paying off lots of debt and savings. This fund will give you a peace of mind!

Start small and build up, once you have a month saved work up to a few months and so on.

Have you got an emergency fund? If not what are you waiting for!

STOREWARDS: How to make money from your receipts.

When you go shopping what do you do with your receipts? Do you throw them away or even tell the cashier not to bother with a receipt? Well I was the same up until 1 year ago, when I learned that you can earn money from your receipts.

All you need to do is take a picture of your receipt and you can earn money! So keep reading and I will share how I use the newest receipt app Storewards.

What is STOREWARDS?

Storewards is the newest app that allows you to turn your receipts into money. It has replaced receipt hog but is so much better! You earn money by uploading pictures of your supermarket or high street store receipts to the app.

You can also share your referral code and earn 1,000 coins per friend that signs up, they are also working on adding some surveys to the app which again can earn you coins.

You can upload more then one receipt a day which is handy if you visit a lot of shops when you do your shopping.

You can also upload up to 35 receipts per week and they must be from the UK.

Once you have reached a certain number of coins you can redeem your coins for a gift card!

Can I take pictures of receipts from any store?

On the app there is a FAQ’s section which tells you which tickets or receipts are not permitted such as:

  • Post office
  • Household bills
  • Credit card slips
  • Hand written receipts
  • Ticket stubs
  • Refund
  • Public transport
  • Cinema

There are many more so please make sure you check out their app for more details.

You also need to make sure that you take pictures of your receipts within 14 days of your purchase and the receipt needs to readable.

How to take pictures of your receipts?

When you take pictures of your receipts there are certain pieces of information that needs to be visiable such as:

  • Store name (Address and phone number if available)
  • Purchase date
  • Purchase time
  • Purchase total
  • Barcodes (if any)
  • The product and price

How much can I earn from STOREWARDS?

Not only can you earn coins from your receipts there are also other ways as well:

  • Snap receipts – 600 coins for every receipt
  • Invite friends – 1,000 fro every invited friend that signs up and submits a valid receipt, your friend will also earn bonus coins
  • Come back every day – Get daily bonuses every day- you get a larger bonus every day until the 5th day
  • Achieve levels – Your levels go up the more receipts you snap – each time you reach a new level you will get a coin bonus.

If you are interested in signing up then use my referral code weik2 to receive some bonus coins!

They have just recently announced the option to send if online receipts using the email provided on the app. Make sure you read the instructions as there are a list of stores that they accept!

What rewards can I earn?

You can choose how you cash out, you can recieve an amazon gift card or cash into your paypal:

Amazon:

  • 20000 coins = £2 Amazon gift voucher
  • 50000 coins = £5 Amazon gift voucher
  • 9500 coins = £10 Amazon gift voucher

Paypal:

  • 22000 coins = £2 cash via payapl
  • 55000 coins = £5 cash out via paypal
  • 100000 coins = £10 cash out via paypal

I have had this app for 1 month and I have already earned £6 in Amazon gift vouchers and I am very close to cashing out another £2.

I love this app, it is so easy to upload my receipts and I receive my coins within 1 day of uploading.

So what are you waiting for? Download this app and earn yourselves some extra pennies!

Share this!

Money lessons I wish I was taught at school

Everything I have learned about money has come from me teaching myself and learned from other people online. I never learned about budgeting, savings, debt or anything to do with finances at school and I really wish I did.

It would have enabled me to understand more about my money and how I can make every penny count.

So this post is for anyone who is unsure how to budget, save and so much more!

Savings:

I wish when I was at school I was taught about savings accounts and how they work. When I left school and started earning money I had no idea which bank to go with and what interest rates are. This meant that I wasted money and when I started my budgeting journey I had no savings.

Everything I have learned about savings is from the internet and the wonderful people over on Instagram.

I have now learned that it is important to save at least 10% of your wage, this will help with any unexpected expenses and emergencies!

Debt:

I was not taught anything about debt, I had no idea that you could use credit cards and spend money that wasn’t yours. One thing I do remember is hearing my parents talking about debt and how bad it is but everyone has some form of debt so its completely normal.

I was so confused by this because at the time all the adverts on TV was telling me to get credit cards, and payday loans great for your credit score etc.

It wasn’t until I started my journey that having debt is not a good thing, and it is not something I should have.

Debt can not only effect you financially it can effect your mental health, the stress of worrying about being able to pay of thousands of pounds worth of debt!

The best way to avoid debt is by having an emergency fund so you are prepared for any unexpected expenses.

Budgeting:

Budgeting is so crucial to your financial freedom and again I had no idea how to do this and how effective it is.

Having a budget no matter what your method allows you to be in control of your money, increase your savings and work hard towards your goals.

I use the zero based budget method and for me it has helped massively.

Check out my post on different budgeting methods that can work for you!

Buying a house:

I did not realise how expensive buying a house was in my head it was something that all ‘adults’ could afford as everyone was buying houses. It wasn’t until I started looking into how much it costs to move I was shocked.

You need at least a 5% deposit of the value of the house you are buying. But with the global pandemic this figure is changing all the time. My boyfriend and I have nearly £30,000 saved which is roughly 15%. But there is also other fees that you need to account for. So please do your research before you start this process.

Not only does it cost a lot of money it takes a long time to move , sometimes it can take 6 months and other times over 12 months.

Pensions:

I thought you didn’t need to start saving for your pension until your ‘older’ but since companies auto enroll people into their pension scheme at the age of 21 it has got me thinking.

I remember learning about pensions at school, but I didn’t learn a lot. Just that when you get old you are giving a pension that helps you live.

I pay into my company pension but I am also considering paying into a private pension as this money will not be enough.

I have learned that it is never to early to start saving for a pension and this is on my to do list for next year!

There is so much more I wished we were taught at school about money and fiances but this post would be hundreds of pages long!

Is there something you wish you were taught at school?

Let me know!

Hannah xx