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Saving tips
How much of a savings safety net should I have?
2 minute read
In this article
What is a savings safety net?
How much should I have?
How do I set a savings safety net?
Key takeaway
What is a savings safety net?
A savings safety net helps prepare you for unexpected expenses. How would you cope with a large, unexpected bill? What if you have a leaking pipe or the exhaust has fallen off the car? Things like that can happen at any time, but having a safety net could take the stress out of the situation and help you manage the cost.
How much should I have in my savings safety net?
It’s recommended you have at least 3 month’s worth of living expenses in a savings safety net, ideally up to 6 months’. Here's a simple way to calculate this:
- First, examine your budget. Read our quick guide to better budgeting here.
- Then list out all of the expenses that need to be covered every month (rent, bills etc.)
- Finally, add them up and then multiply that figure by three or six (3 or 6 months)
"Customers who start building a savings safety net tell us that the best way to do that is by setting a goal, which is personal to them, and committing to that goal by putting away a small amount each month. Doing this when you are paid, and taking the approach of saving little and often, means it all adds up quickly - resulting in less worry and more confidence for whatever the future holds."
Lewis Broadie | NatWest Savings Expert
Leads the NatWest Retail Savings team
How to build up your savings safety net
1. Reduce your monthly outgoings
look at your budget and decide whether you could reduce any spending each month (then reduce it!)
2. Open a savings account
if you don’t have one already. You may want to might want to think aboutopening a new one with instant access just for your savings safety net.
3. Set a savings goal
based on how much you need to have for an emergency fund. Once you’ve met your target, you couldset yourself a new goal to save towards
4. Pay yourself first
set up a regular payment into your savings account for when you are paid – just like you would for a rent or mortgage payment.
Final thoughts
Hopefully now that you have a better idea of whata savings safety net is and what it should be used for, you could start building your own safety net so that you'll be prepared for if something unexpected happens.
Remember, everyone’s safety net will look different but the sooner youstart saving and putting some money away, the better prepared you’ll be.
NatWest Money Blog team
