Why you should save a safety net fund
Behind the Business is our weekly blog where we interview women who inspire us. One of the questions we ask is,
“What piece of money advice would you give your younger self?”
Most often the reply is, start to save.
I loved her money advice,
“Consider each purchase before you make it. Rather than spending small chunks of money across the month on clothes you won’t still be wearing in six months, put that money aside and do something real with it.
Also start a safety net fund. Life is unpredictable. If my computer breaks, or if there’s any other kind of emergency, then having money already set aside would be game-changing.”
When I started work as a trainee lawyer, many moons ago, I had to repay a loan I had taken out to pay for law school. Trainee lawyers were not paid much in those days and I struggled to pay my London rent and repay the loan but I somehow I managed.
As soon as it was paid off I decided I wanted a “rainy day” fund rather like Beth’s safety net fund. Honestly, I was scared of not having the money to deal with sudden emergencies and so I began to save the same amount I had been paying each month for the loan.
Over the years my “rainy day fund” has grown and I still pay into it. It really helps with my 3am money meltdowns!
Having savings means you can start to be your own banker. When I enrolled for a weaving course recently I borrowed the money from my savings, rather than putting in on my credit card. It’s a 10 week course and each week I am paying back 1/10th of the cost. So by the end of the course I will have paid off my course without incurring any expensive credit card debt.
Not only does this mean I will replenish my savings so that they are available for other things, it also keeps me connected to the cost and value of the experience. I was going to miss a week to go away but when realised I would still have to make the week’s payment, I rearranged my trip for a different time.
Do you have a safety net fund? If you don’t, then how would it feel to have one?
Having a savings goal also makes you far more conscious about your spending. We are bombarded daily by messages encouraging us to buy. I was shocked to discover that average consumer is exposed to up to 10,000 brand messages a day.
It’s not surprising then that it takes a certain amount of focus to use your money to build a life you love rather than one the big brands would like you to buy.
So if you take one step with your money next week, why not decide to start a safety net fund? Even if you start small, every penny really does add up.