The ultimate rule of life is to always expect the unexpected. Here’s some reasons why putting money in a little nest egg or a rainy day fund can make sure you get you or your loved ones out of a jam; somewhere you can easily get hold of it like an easy access savings account.
Here’s our ten top reasons to have an emergency savings fund so you aren’t thrown out of kilter and always have a contingency in place when those sudden expenses strike.
- The broken boiler – it may be mundane but when the boiler breaks, it is bound to be in the middle of a freezing cold winter’s night. It will warm your heart to be able to dip into that contingency savings fund, even if it is just the security of knowing you have enough for a costly emergency callout for the plumber or, in the worst case, a whole new boiler.
- Bank of “mum and dad” – a parent wants the best for their children and it’s natural to want to help them out when they find a house, announce they are getting married or want to go back to university to do a Master’s degree. Having a pot to dip into means you can celebrate those special announcements with peace of mind that you have enough to support the kids with their latest endeavour.
- A broken gasket – car problems can be sudden and expensive whether it’s a flat tyre, engine failure or a prang on the road. Even if you have car insurance, there is often an excess amount that you need to pay out for as well. You also never know when circumstances are beyond your control and you will need to start looking for a new car.
- Baby love – A new grandchild is on the way and that’s not cheap. You may want to set up a fund for their future, buy a top of the range pushchair or car seat, or make sure they are the most stylish tot in town by buying them regular designer baby clothes.
- In sickness and in health – an emergency root canal can be just as painful to the purse strings as it is in your mouth, whether you have an NHS dentist or not. Then there are more complex procedures of crowns and bridges, which cost £256.50 on the NHS alone. As years go by, you may also need more scans, tests and treatments. By having some easy access savings, it means that you have the choice available to you if you want to pay for private treatment.
- Coming of age – it’s natural to want to maintain the lifestyle you have grown accustomed to when you retire. With annuity rates being low, a way to guarantee having a disposable income that supports a similar lifestyle to when you were working is by having planned, and saved, in advance. If not, you may have to sell up and downsize your home to release some equity.
- Water, water everywhere – there are 5.2 million homes at risk of flooding in England and of these, less than 10% think they are at risk and even fewer have plans about how to respond if a flood hit, according to the Environment Agency. If the worst happened, at least you would know you have something put aside to cope with the immediate cost of a hotel or new furnishings before any insurance money comes through.
- Pet project – a pet is as much a part of the family as anyone, so when Freddie the Hamster suddenly turns green or Snoopy swallows a beer bottle top, the vet is the only place you want to go. Emergency vet fees can be costly, especially if it is for an out-of-hours service.
- Shoes to die for – some people may not count that wonderful moment when you clap eyes on your dream shoes as an emergency, but others may consider it a disaster if you allow them to slip through your fingertips. Whether it’s the most comfortable pair you’ve ever slipped on or they make you feel like a million dollars as soon as they are on your feet, whatever the price tag, you won’t have to walk away from them empty-handed thanks to your savings pot.
- An unexpected invite – a once-in-a-lifetime offer to visit Buckingham Palace or an invite for a coach trip to see Strictly Come Dancing on tour waltzes its way on to your doormat, what do you do? If you want to be in a position to say ‘yes, Anton and Oti, I’m coming!”, it’s the perfect 10th reason to have that emergency pot of money.