Financial resilience is the ability to cope if you are hit with an unexpected bill, like car repairs or a boiler breaking down. It's sometimes referred to as an emergency savings fund or buffer.
Having an emergency fund gives you peace of mind and means you will be less likely to have to apply for credit, in the form of a loan or overdraft or using a credit card, all of which mean having to pay interest.
A good rule of thumb to give yourself a solid financial cushion is to have three months’ essential outgoings available in an instant access savings account.
So, if you spend a total of £1,000 a month on your mortgage or rent, food, heating bills and other things you can’t live without, you should aim to have a minimum of £3,000 in emergency savings. However if you can afford more then this may help with any unexpected costs you could face.
If you have less than three months' essential expenditure saved, work out your budget and set up a standing order direct to a savings account on payday. If you’re on a tight budget, start with a small amount to get into the habit of saving and review on a regular basis. Something is better than nothing.
The information, money-saving tips, tools and techniques provided are for guidance purposes only and do not constitute financial advice. Where we provide links to third-party websites we are not responsible for their content. It is therefore important you carry out your own independent research.
If you need financial advice you can locate an adviser on the Personal Finance Society website below.