Figuring out how to save money for emergencies on your own terms

Everyone has different financial needs, but remember we all need some sort of emergency fund.

13:20 13 January 2014

Advice on how much money to maintain in a savings account varies from person to person. Some will say six months’ worth, and others will say three months’ worth is sufficient. Much of that has to do with your personal level of comfort, but for some people saving even a months’ worth of wages can seem like an impossible task.

Here are a few steps to help you get that savings account to whatever goal you choose.

•    Decide on an amount

When you choose the amount you would feel comfortable having in savings, remember to account for things such as vehicle repairs, appliance replacement, and other potential expenses. Do not lose hope if the amount you want in savings seems too high.

•    Compare options

You have a variety of options to help you reach your savings goal. Make sure to look into each option and then compare with other financial institutions to be sure you get the best deal. Higher rates of interest will help you earn money in addition to the amount you put into a savings account. If you have some time, Cash ISAs are sometimes better for shorter-term savings goals.

•    Accessibility

When deciding on a savings option, remember that at least a portion of the money is for emergency use. Make sure that you would be able to easily and quickly access at least some of the money you save.

•    Commitment

Sometimes the most difficult part of saving is remembering to set aside money on a regular basis. You can find out if having money automatically deposited into a savings account is an option.

•    Long-term

Once you have established a sum of money for savings, you may want to consider investing a portion of it to get a better rate of return. You could turn smaller sums into much larger ones.