Wednesday, 29 July 2009

Are you prepared for the bleak winter of 09?

Ok, so the title sounds scary but the truth is, with job losses, increased costs, energy prices changing all over the place, Swine Flu panic and strikes, we’re all at a loss as to what the next 6-12 months will bring.

I know of people whose mortgages have reduced by about half, and instead of saving the cash, they are preferring to go on expensive holidays. Normally I would be tempted by the same thing in their situation, but in the current climate? No chance.

If you do not have an emergency fund to be your safeguard in this recession, please start one. It is better to have something as a buffer than nothing. It means if you are ill, or your partner is ill, or your washing machine dies, or your car just suddenly stops, you have a stash to cover the problem. Even worse – what if you are ill for several months, or you lose your job?

I started saving £5 a month many years ago when I earned £80 per week, my rent was £40 of that. It was back breaking work and very hard to put that £5 aside, but I did it. The years went by and I increased the amounts as I could, I couldn’t yet afford a pension yet so at least I thought I should increase the savings slowly.

That idea stayed with me and I kept it going. That £5 a month turned into a thousand after a few years which made me feel I could cope if I lost my job and needed to look for another one.

These days, the recommendation is that you have 3-6 months worth of salary just in case. It means if you lose your job, or want to change and walk away from the job, you feel safer.

Savings rates are not amazing right now, but the main reason to do this is for protection, not rates.

So no matter what the next 6-12 months bring for us all, please make sure that if you are paying any debt obligations, you also put a little aside for the emergency fund. You will feel better and able to look ahead and not worry as much about what will happen. We are all in the same boat, so worth having a lifejacket!

8 comments:

JadeLD said...

I definitely agree with you, I am saving a bit each month and really trying to encourage my boyfriend to do the same.

If everything brightens up we can use this towards our house deposit but if something goes wrong we have an emergency stash. I won't be jumping into buying my next house without an emergency fund!

I love the comment about all being in the same boat and needing a life jacket - so try, nice comparison.

Jade

PS I'm still doing some clicks, moved house and got no internet at home at the moment so just some time for blogging and a few clicks at lunchtime! Hope it's all going well for you.

SavingsNow said...

Thanks Jade! Hope the new place is ok - still 5 months for daily clicks so fingers crossed you can get a little cash from that.
For me it's sometimes hard to see others spending what I can't, but mostly we just think of what we want to achieve as a team and try to do what's best for us. It means holiday tv adverts and flash nights out are very tempting though! But my savings goal every month is on track, so I know what you mean about having an emergency stash before buying a place. Same here!

Anna said...

Great post! I have been trying to make my OH see how important it is to have a bit of money saved up for a 'rainy day' - he just doesn't seem to get it, and tells me I'm nagging when I talk about it! I've got an emergency fund put by myself, and I think he just thinks I'd lend him money if his car needed an expensive repair or something - but he will have a nasty surprise when that day comes, because I won't bail him out! He really needs to start his own savings fund too. I think I'll show him your blog post - he might understand it better coming from someone else :D So thankyou!

Nitha said...

Great blog! I'm preparing to have a second child and then achieve my personal goal - becoming a full-time mum. I still have an overdraft at the moment which I'm putting a minimum of £50 a month, but the ideal will be £100.

mrs green said...

Hiya :)

I've nominated you for an award. I hope you're pleased and will pass it on.

Thanks for all your inspirational posts on your blog; it's lovely to have the chance to say a public 'thank you!'

best wishes
mrs Green at myzerowaste.com

http://myzerowaste.com/2009/08/our-one-lovely-blog-award/

SavingsNow said...

Thank so much everyone for your comments and I am glad this post has inspired you to stick to your goals.

Please do it for yourself and hopefully when others see what you are doing their behaviour will change. My other half used to spend more and so did I. When I started to be savvier and put more away, it took a while but he was influenced by this too.

Now we both save monthly, trying to buy a property is a goal but mostly we just want to be prepared should we suffer a job loss or any emergency.

It is the only way to be recession proof - pay off debts and have a safety net! Hopefully we can all work together for ideas and for inspiration x

Vixen 307 said...

the recession hit just as Hubby became disabled and we had very lean times waiting for benefits plus our car was stolen and written off and despite have a gap insurance were still left with a debt on the old car. This is the first month we have had cash to spare so I am holding on tight to it. Its only through scrimping and scraping and growing my own veg that I have got this far - so next year who knows - debts paid off and freedom awaits?

SavingsNow said...

Hi Vixen307, sorry to hear about your hubby - it is very hard to come to terms with, but it does seem you are on the right path. With any luck the next 12 months will look brighter for you and I guess perhaps we can all learn from this now, so that in future we know what to expect if it happens again. Great to hear from you and I hope this and other blogs help you out x