Emergency Funds and Why They Matter

Do you have an emergency fund – and if not (at the risk of sounding like your mother, or a teacher), why not?!

The very definition of an ‘emergency’ is that you don’t know when it’s going to happen. So, whether you’ll need a pot of money to dip into for unexpected dental treatment, house or car repairs or something a little more exciting like an impromptu holiday, saving for life’s unforeseen moments makes perfect sense.

Let’s take a closer look at why you should have an account, ready to access, as and when you need it:

A Sudden Loss of Job

We hate to start this blog post with something so bleak, but we could all do with considering what we’d do if we suddenly lost our income. Some people may be comfortable enough, while most of us might find that times become tough. Really tough, even.

An emergency fund, therefore, could give you the peace of mind you need that you have some funds stashed aside to cover you for, say, three months or so. This should hopefully give you enough time to scour the job market, find a relevant role or two, put in an application and, fingers crossed, maybe bag one of them.

Of course, Jobseekers’ Allowance is there for those who need it but it’s still worth having a financial buffer of sorts. After all, you may only receive up to £77 per week on Jobseekers’ Allowance, which may barely cover your mortgage or rent, never mind your bills on top.

If you can afford to, consider putting some funds aside each month – just in case.

Family or Pet Emergencies

Alongside unexpected household repairs, other family-related emergencies (relating to your human family or your fur-based one) may crop up throughout the year. These could be anything from a relative who lives oversees falling ill (perhaps you’ll want to book a flight and/or accommodation at a moment’s notice), to a beloved dog racking up a costly vet’s bill.

Your employer may not provide paid leave for the former, while even a single trip to the vet can be as costly as your MOT bill. In short, preparation is key, and you may be able to breathe a small sigh of relief once you remember you have your emergency fund as backup.

Tax Bill

If, like many people here in the UK, you’re self-employed, perhaps your annual tax bill always takes you by surprise. No matter how meticulously you feel you’ve calculated what you owe HMRC, your accountant might still give you a nasty shock when they present the figures (after all, there’s ‘payment on account’ to think about as well) to you.

Again, unexpected tax-related costs are just another reason why some people might decide to have an emergency fund at their disposal.

A Holiday

We’ve mentioned this one already but we thought it was important to mention it again. The reason? Unexpected costs don’t always have to be ones that leave you hanging your head in distress.

Perhaps you’ve simply had a busy time at work and want the option to choose, as and when you’d like, to go: ‘Right, let’s finally book that family holiday abroad!’.

Put aside £50 a month, if you have the spare funds, and towards the end of the year (when you’re probably craving some winter sun), you should have at least £500 to put towards that much-needed break.

If you want to set up that emergency fund sooner rather than later, why not consider Unity Mutual’s Flexible ISA? You can withdraw funds as when you like, but the account also makes investing easy over the medium to long-term, based on the growth potential of the stock market – find out more here.

Chat to us about our Flexible ISA…

Those who are keen to make setting up an emergency fund one of their goals for 2023 can talk to our friendly team about Unity Mutual’s Flexible ISA* but make sure you read the Terms & Conditions to ensure this product is right for you.