I’ve fessed up our debts and now it’s time to talk savings. You just gotta have savings, you know, and 3 to 6 months living costs is generally the standard recommendation from debt free guides and saving gurus.*
However as I’ve been reading I’ve come across those who laugh in the face of ‘everybody says’ and choose not to have any emergency savings and it got me thinking….What if the washing machine breaks? – we’d buy a new one with the credit card. Well what if the roof leaks? – I’d ring up the insurers, get estimates, chuck it on the credit card and wait for the insurance money. Ok then, what happens if one of you looses your job? – we’ve both been with our companies for over ten years so the redundancy pay should tide us over while we get the first job offered and reduce spending. Oh. What if you got fired? – I’d take any job going, reduce our spending and rely on the family.
It’s nice to have an answer for everything even if some wouldn’t stand up to scrutiny.
Overall though I reckon having some savings would make everything feel more manageable and certainly give me some peace of mind for the what if’s. I aim to save three months living costs by the end of the year in the highest interest accounts I can find.
Clear the credit card debt and save an emergency fund by the end of year, it’s a start.
* If you’re seriously short of cash then just £50 is a good start to an emergency fund. From little acorns mighty oaks grow and all that, however you might be reading the wrong blog here. Check out Elaine or some of the MSE forums for inspiration.