An emergency fund is a savings account that you set aside to cover unexpected expenses. These expenses can be anything from a car repair to a job loss to a medical emergency. Having an emergency fund can help you avoid going into debt or having to sell your belongings to cover these expenses.

How much should I save in an emergency fund?

A general rule of thumb is to save 3-6 months of living expenses in your emergency fund. This means that if you lose your job, you will have enough money to cover your rent, food, and other essential expenses for 3-6 months. However, the amount you need to save may vary depending on your individual circumstances. For example, if you have a lot of debt or have a high risk of losing your job, you may need to save more than 6 months of living expenses.

Where should I keep my emergency fund?

Your emergency fund should be kept in a separate savings account that is easy to access but not so easy to access that you will be tempted to use the money for everyday expenses.

How do I build an emergency fund?

The best way to build an emergency fund is to start saving small amounts of money on a regular basis. You can set up an automatic transfer from your checking account to your savings account, or you can make a point of saving cash every day or week. Even small amounts of money can add up over time.

Here are some tips for building an emergency fund:

• Create a budget and track your expenses so you can see where your money is going.
• Cut back on unnecessary expenses.
• Set realistic savings goals.
• Get a side hustle or sell unused items to make extra money.

Benefits of having an emergency fund:

• Peace of mind: Knowing that you have an emergency fund can give you peace of mind and reduce stress.
• Avoid debt: An emergency fund can help you avoid going into debt to cover unexpected expenses.
• Better financial decisions: Having an emergency fund can help you make better financial decisions, such as saving for a down payment on a house or retirement.

Here are some examples of how an emergency fund can be used:

• To cover the cost of a car repair
• To pay for a medical emergency
• To cover your expenses if you lose your job
• To make a deductible on your insurance

An emergency fund is an essential part of any financial plan. By saving for an emergency fund, you can protect yourself from the unexpected and improve your overall financial security.

This year, Hertsavers Credit Union is excited to participate in #TalkMoney Week, an initiative encouraging individuals, stakeholders, partners, organisations, and businesses across the UK to inspire financial wellbeing by doing one thing. We believe that it’s the small steps that count, and we want to make some noise about it.

Our goal is simple: get everyone talking about money together.

1. Review your budget

Start with the basics by reviewing your budget. This is a small but powerful step in understanding your financial health. Take a closer look at your income and expenses to identify areas where you can save more.

2. Save automatically

Setting up automatic transfers from your checking account to a savings or investment account can make a significant difference. It’s an easy way to ensure you’re consistently saving for a rainy day or future goals.

3. Address your pension

Checking the address on your pension might sound minor, but it’s crucial. Ensuring that your pension information is up to date can prevent issues down the road and secure your financial future.

4. Talk to your children about money

Start financial education early by discussing pocket money and financial responsibility with your children. Teaching them good money habits from a young age can set them up for a more secure future.

5. Use financial tools and calculators

Take advantage of the free tools and calculators available on the MoneyHelper website. Whether you’re planning for retirement, managing debt, or setting savings goals, these tools can provide valuable insights.

6. Review subscriptions

Take a few minutes to go through your monthly subscriptions and cancel any that you no longer use or need. This can free up extra funds.

7. Shop with a list

Before going grocery shopping, create a shopping list and stick to it. This simple step can help you avoid impulse purchases and save money.

8. Negotiate bills

Contact your service providers, such as internet or cable companies, and negotiate for better rates. You might be able to lower your monthly bills.

9. Set up an emergency fund

If you don’t already have one, establish an emergency fund with a small initial contribution. Even a modest fund can provide peace of mind during unexpected financial challenges.

10. Sell unused items

Declutter your home and sell items you no longer need online or at a garage sale. The extra cash can be a great boost to your finances.

11. Plan meals

Plan your meals for the week, reducing the need for takeout or dining out. Cooking at home is not only cost-effective but often healthier too.

Why it matters

Talking about money may seem intimidating, but it’s essential. When we share our financial experiences, we make better decisions, strengthen relationships, and reduce stress. These small actions collectively create a financially educated and resilient community.

Financial wellbeing is about more than just money; it’s about peace of mind, opportunities, and security for yourself and your loved ones. By participating in #TalkMoney Week and doing one thing to improve your financial situation, you’re taking a meaningful step towards a brighter financial future.

Interest is a concept that affects our financial lives on a daily basis. Whether you’re borrowing money, saving for the future, or investing, interest plays a significant role. In this blog post, we’ll explore what interest is, how it works, and why it matters to you.

How does interest work?

Interest is typically expressed as a percentage and is calculated based on the principal amount, which is the original sum borrowed or invested. There are two main types of interest: simple interest and compound interest.

Simple interest is calculated only on the principal amount. For example, if you borrow £1,000 with a simple interest rate of 5% per year, you’ll pay back £1,050 at the end of the year (£1,000 principal + £50 interest).

Compound interest, on the other hand, takes into account both the principal and the accumulated interest. It’s calculated based on predetermined compounding periods (such as annually, semi-annually, quarterly, or monthly). As interest is added to the principal, future interest is calculated on the new total, resulting in exponential growth over time.

Why does interest matter to you?

Understanding interest is crucial because it impacts your financial decisions. When you borrow money, the interest rate determines how much you’ll have to repay, so it’s essential to compare rates and find the best deal. On the flip side, if you’re saving or investing, the interest rate determines how quickly your money will grow over time. Higher interest rates can lead to greater returns, while lower rates may limit your earning potential.

In conclusion, interest is a fundamental aspect of our financial system. It affects both borrowers and lenders, savers and investors. By grasping the concept of interest, you’ll be better equipped to make informed decisions about borrowing, saving, and investing, ultimately improving your financial well-being in the long run.

As a parent or guardian, you may have experienced a plea from your child/ward to buy something that you hadn’t budgeted for. Here are some tips to consider:

Be empathetic and understanding: Start by acknowledging your child’s desire and show empathy towards their feelings. Let them know that you understand their want and why it is important to them.

Explain the reasons: Provide a clear and age-appropriate explanation of why you are saying no. For example, you can mention budget constraints, the item not being suitable or necessary at the moment, or other priorities that need to be considered.

Offer alternatives: Instead of simply saying no, offer alternatives that are more feasible or aligned with your values. This could involve suggesting a similar, more affordable item, or proposing an alternative activity or experience that could bring joy or fulfil their want in a different way.

Encourage saving and goal-setting: Teach your child the value of saving money and setting goals. Help them understand that if they really want something, they can work towards it by saving their own money or by setting goals to achieve it over time.

Stick to your decision: Once you have explained your reasons and offered alternatives, it’s important to be firm and consistent with your decision. Children need to learn that every want cannot be fulfilled instantly and that it is okay to experience disappointment or frustration.

Remember, it is essential to communicate with your child in a patient and understanding manner, encouraging open dialogue and helping them develop a healthy understanding of needs, wants, and responsible decision-making.

The theme for International Credit Union Day 2022 was “Empowering your financial future with a credit union”. This encouraged us to show you, our members, and anyone else who is thinking of joining us on how we thrive on financially empowering our members.

What does it mean to be financially empowered?

As Dave Ramsey, an author, said, “You must gain control over your money or the lack of it will forever control you.”

By being financially empowered you will have control of your financial situation. You have the knowledge and resources to make your money choices and move towards your future goals. You will be able to overcome any obstacles that come your way and you will be able to enjoy life.

Some of the ways that you can empower your financial future with Hertsavers are as follows.

1. Build up your savings to cover any emergencies.

We have a wide range of savings accounts that can help you jumpstart your savings.

What’s more, you should aim to save money on a monthly basis. If you are on the Hertsavers Salary Saving Scheme, you can automatically save as your earn so you don’t have to worry about remembering to put money each month. Find out more.

2. Asking for help when you need it

Sometimes changes in our lives can lead to financial difficulties. At Hertsavers, we support our members with loan products designed to sustain and uplift you during difficult times. From offering top-ups on child benefit loans to Homeowner loans, we’re constantly reviewing and creating new products to suit our members’ financial situation.

3. Create a financial plan

Having a financial plan where the ultimate goal is to save money, create an emergency fund, and keeping track of where your money is going, will not only improve the way your feel about money but also give you control over your finances.

4. Set financial goals

When setting goals, think of them as long term or short term goals.

Long-term financial goals

Think about what you want in the long run. Is it to be able to own your home? Provide the best education for your children? Retire earlier?

These are called long-term goals as they may take time to achieve.

Short-term financial goals

These are goals that are quick and easier to achieve over a short period of time. For example, saving up for a summer holiday; buying a car; renovating your home; saving up for your wedding.

Set SMART (specific, measurable, achievable, realistic and timely) goals so that they are easy to focus on.

5. Make a budget and review it

Budgeting is an effective way to track your spending which would eventually help you reach your financial goals.

By reviewing your budget constantly, you will be able to see what you are spending on. If there is any unnecessary spending such as subscriptions that you aren’t using or contracts which have ended, you can cancel these or look for better deals.

You can use budgeting tools to keep track of your expenses.

6. Become financially literate through self-learning. Some of the ways that you can do this is through videos, blogs , podcasts and books.

You can even become a volunteer board member where you can sharpen your financial skills, gain leadership skills and network with like-minded individuals.

7. Do a financial health check at least once a year to find out what your current state of affairs is and make adjustments. You can find out how you can do a financial health check here.

Why choose a credit union in the first place?

• Equal Ownership – Credit unions are democratically controlled and member-owned and member-operated. Each member has equal ownership and one vote regardless of how much money he or she has in savings.

• Not for Profit – Credit unions are not-for-profit financial cooperatives that provide a safe, convenient place for members to save money and access loans and other financial services at reasonable rates.

• Social Purpose: People Helping People – Credit unions exist to serve their members, not to make a profit. Every member counts, including those of modest means. This “people-first” philosophy impels credit unions and their employees to get involved in their community and support worthwhile causes.

• Volunteer Leadership – Each credit union is governed by a volunteer board of directors elected by and from the credit union’s membership.

• Financial Education for Members – Credit unions place particular importance on educational opportunities for their members and the public to help everyone become better-educated consumers of financial services.

• Trust – Lately credit unions have received positive press for being trustworthy and resilient institutions during a tumultuous time. Credit union members worldwide can be proud of these accomplishments and rest assured that their money is safe at the credit union.

Conclusion

By empowering your financial future, you will be able to reduce your stress, have a better outlook towards life and achieve your long-term goals.