Build a rainy day fund with your credit union
One of the sharp lessons learned from the Covid-19 lockdown is the need to build a personal financial buffer for the future.
Aside from the tragic human cost of this global pandemic, households are struggling to make ends meet with many recognising that if they had been more financially resilient the impact would have been more manageable.
Every year, almost a million people in the UK are unable to work for a month or more because of sickness or an accident.
The Money Advice Service suggests that a good rule of thumb to give yourself a solid financial cushion is to have three months’ essential outgoings easily accessible.
So, if you spend £1,000 a month on mortgage or rent, food, heating bills and other essential outgoings, you should aim for a £3,000 emergency savings pot.
Anti-debt charity Step Change says that, if every household in the UK had £1,000 saved, it would reduce the number of people falling into problem debt by half a million.
But remember any amount squirrelled away will help you if you have to pay for something you weren’t expecting – from a new washing machine to a car.
According to a 2017 report by Liverpool Victoria Friendly Society:
• A third (33%) of people didn’t think that they could handle a personal financial crisis;
• 32% of respondents worried that they would never be able to save ‘for a rainy day’;
• Only 37% of people in the UK have three months-worth of outgoings set aside as savings.
Having an emergency fund will help you feel financially secure because you have the worst-case scenario covered.
More than 140 Welsh employers recognise the importance of a savings culture for their staff and are payroll partners. These organisations are showing their commitment to the financial wellbeing of the workforce and encouraging them to save and borrow responsibly, while also benefitting the local community.
If money is already tight, consider anywhere that you can make savings, however small, from budgeting for your weekly shop to cutting back on eating out. Read our helpful tips on how to achieve that.
Once you open a savings account with your local credit union you begin to take control of your finances and whatever you can save now will secure you against an income shock of the future – however large or small.