Welcome to Good Money Vibes, the podcast where millennial women in the UK transform from being bad with money to becoming financial rockstars. Are you tired of feeling lost in the world of personal finance? Do you ever think, “I’m just not good with money?” Well, fear not. You’re in the right place.
Every Thursday, we dive into the heart of money matters tailored just for you. Good Money Vibes isn’t your typical finance podcast. It’s a friendly and conversational journey into the world of money, mindset, intentional spending, behavioral finance, and all things money education. I believe that being smart with money doesn’t have to be dull. It’s about understanding your financial behaviors, making purposeful decisions, and most importantly, feeling good about where your money is going. The episodes are packed with practical tips, expert insights, and relatable stories, all designed to empower you to take charge of your financial life with confidence and joy. Whether you’re sorting out your savings, tackling debt, or just curious about how to make your money work for you, Good Money Vibes is your go-to guide.
We’re not just a podcast; we’re a community. After tuning in, don’t forget to join our Money Confidence Club on Facebook. It’s a space filled with supportive women just like you, all on their journey to financial freedom. So grab a cuppa, hit play, and let’s turn those money woes into money wins. Welcome to Good Money Vibes, where good money management meets great life choices.
Hello and welcome to another episode of Good Money Vibes. This week, I want to talk to you about the number one and quite possibly the only thing you need to focus on if financial security is your jam. That’s to say it should be everyone’s job. Everyone should be having financial security on toast for breakfast in the morning. What I really want to kind of zone in on is the fact that there’s only one thing you need in your financial repertoire that is going to help you build financial security, help you feel financially secure, and essentially just go on living your life and not having to worry about money. That is, drumroll please… an emergency fund.
An emergency fund, if you don’t know what that is, is a savings account that you have set aside for emergencies. The amount of money you put into it will differ from person to person. And don’t worry, we will get into it. Because the number one question I get asked is, “How much money should I have in my emergency fund?” Don’t worry, we’ll talk about it. But essentially, it is there to cover you in case something goes wrong. It is not there for if you’re scrolling ASOS and see a new dress, or for late-night Amazon scrolls. It is there for emergencies, like if you’re a homeowner and your boiler breaks down, if you have a car that needs repairs, if you get made redundant or lose your job, or if your mental health gets really bad and you decide to quit your job. It gives you the flexibility, freedom, and security to do whatever you want with your life, knowing that you are covered in case of emergencies.
So, let’s talk about that number one question: how much should I have in my emergency fund? Financial advisors and professionals have been throwing around the idea of having an emergency fund of 3 to 6 months worth of expenses for what feels like millennia. What that looks like is if you look at your household expenditure – the bills you need to pay to keep a roof over your head, keep your heating on, have enough food in your fridge – you want to cover your basic living expenses. Multiply that by 3 to 6 months.
But that is just a guide. The idea behind it is to cover you if you were to lose your job and need time to find another job or build a business. However, this can feel overwhelming for those who have never managed to save money. So, start with a number that feels safe and achievable. For some, this might be £500; for others, it might be £1000. Start with a small amount, then build it up as you gain more confidence and stability.
Once you have your starter fund, you can focus on paying off debts and then gradually increase your emergency fund to a larger number that makes you feel more stable. Some people call their emergency fund a “fuck off fund” because it gives them the freedom to walk away from bad situations, like a bad job or relationship.
Consider your financial responsibilities. If you are a homeowner, have a car, children, or are self-employed, you might need a larger emergency fund. If you have stable employment and fewer financial responsibilities, your emergency fund might be smaller. Start with around £1000 and see how you feel. Personal finance is personal, so the amount you need in your emergency fund will be unique to you.
Think about your expenses and lifestyle. Consider the likelihood of certain things going wrong and the cost of those events. Plan logically and set a number that makes you feel comfortable and protected. Build it up slowly if needed. Even small savings can make a difference. One client of mine is doing a £5 a week challenge to build the habit of saving money rather than spending it all.
Where should you keep your emergency fund? An easy access savings account is a good option because you can get to your money quickly if needed. For those who tend to dip into their savings, consider premium bonds. Premium bonds are a savings account where, instead of earning a set interest rate, you’re entered into a monthly lottery. This can create a layer of friction, making it harder to dip into your savings impulsively. It also takes 2 to 5 days to access your money, which can help you avoid spending it on non-emergencies.
Make sure your emergency fund is separate from your regular banking accounts. This helps prevent you from dipping into it for everyday expenses. Some people hide the balance of their savings account to avoid temptation.
Lastly, do not invest your emergency fund. Investments can fluctuate in value, and you don’t want to risk losing money when you need it most. Keep your emergency fund in a savings account where it’s safe and accessible.
Once you’ve built your emergency fund, what’s next? Visualize where you want to be in five years. Think about your ideal life, job, home, car, family, and other goals. Identify the gaps between your current situation and your ideal future. This is where you can allocate any extra money.
Investing is another important step. Start investing early to take advantage of compound interest. Investing alongside working towards your ideal lifestyle can help you achieve financial goals.
Remember, it’s okay for your lifestyle to inflate as long as it’s planned and manageable. Make sure your emergency fund matches your lifestyle changes. Evaluate and adjust your emergency fund as needed to ensure it continues to provide the security you need.
I hope you’ve enjoyed this episode. I love talking about money, so always feel free to reach out with any questions or topics you’d like me to cover. Thanks for listening, and I’ll speak to you next week.
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