Do you need an emergency fund?

Rather than saving for an abstract emergency, you should target specific, easily identifiable expenses.


Finance experts have been telling the general public for decades that everyone needs an emergency fund to be able to save successfully and feel a bit more financial security. However, not all financial gurus are fond of this idea. We think that it is more useful to take into account human instincts and natural behaviors, rather than rely on pure logic. And it’s worked magic for our clients.

Better Way of Saving

You do need to stash away some money in order to save. But rather than saving for a abstract emergency, we want you to target a specific, easily identifiable expense. For instance, money will be saved for an unfortunate event of losing a job. In this case, you are less likely to raid your secret stash. After all, you know the specific cause that you were saving for. On the other hand, you would easily rationalize why you would access your abstract emergency money, since you are unsure what is the exact purpose of holding them. Even though the amount of money might be the same, “medical emergency” label would make you think twice before dipping into the fund.

Additionally, we recommend making small monthly contributions to unplanned expenses budget, such as car repair. This way you would not have a significant reduction to your disposable income, yet in the case of emergency, car repair will not turn into a disaster.

In an event when you absolutely have to borrow from your emergency fund, there is a higher chance you would return the money when the opportunity arises. You know how much and why you need to put back, there is no abstraction and your goals are clear.

At Home and Mortgage Advice we help our clients to achieve financial success. We have extra tools that will help you to budget your monthly expenses. Furthermore, we provide offers that will allow you reduce your monthly debt payments by up to 70 per cent. Contact us today for more details.


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