Why now’s the time to start building a rainy-day fund

Unexpected costs like your boiler breaking down usually come at an inconvenient time - and they’re probably expensive too.

So with household budgets already under pressure, it’s no surprise that more people want to make sure they’re better prepared for financial shocks.

In fact, new figures from Pension UK show that nearly one in three Brits (28%) plan to build up a rainy-day fund this year.

That’s up from 21% last year.

It can be tempting to avoid the uncomfortable fact that even relatively small unexpected costs can cause real problems.

So it’s good to see that more of us want to get on the front foot and become more resilient.

Could you cope with surprise expenses?

Whether it’s a broken washing machine, a car repair or an emergency trip to the dentist, surprise expenses are rarely cheap.

And that means it could have a huge knock-on effect.

A recent poll by the Salvation Army found that almost half of UK adults (48%) fear they’d be unable to pay their rent or mortgage if they were hit with an extra £100 expense.

Similarly, research from the Living Wage Foundation shows that almost half (45%) of low-paid workers don’t feel confident they could afford an unexpected but necessary cost of £200.

That’s why it’s so important to make sure you have a little bit put aside, so you can cover surprise expenses without resorting to borrowing or dipping into savings.

How to build a rainy-day fund

A good goal is to have enough saved to cover around three months of your living costs - things like rent, bills, food and transport. 

Of course, that will sound a lot - and perhaps even unrealistic - if you’re already struggling to cover your essential expenses.

But you don’t need to save hundreds right away. 

Even if you only put aside £1 a week, it’s better than nothing. 

So why not take small steps like putting your spare change in a jar at the end of each day? 
 
And then at the end of the month, you can put it into a savings account. 

Life doesn’t give much warning, so if you have a financial shock, having even a little bit of money put aside can take away some of the stress.

Check out our tips on how to build up a rainy-day fund to help you get started.