Saving for a rainy day

A_Couple_In_Love

Hi,

Been discussing with my partner this morning about planning to save for a "Rainy Day".

We will have our own house, on a mortgage, and worried about if one of us gets made redundant.

How much money do you all have roughly as a back-up to cover your self?

Our house will be Insured so not thinking too much about covering the costs of major damages etc.

If you don't mind, could you please put an estimate of what you have saved for "a rainy day". If not, please could you advise me on a rough guide of how much to save.

We are not too interested in other insurances apart from our house insurance, we want to save our own "back-up money".

Thanks.

vectistim

I think most of us (in a position to do so) have around six months worth of expenditure reasonably available in cash.
Some others will have other tranches in 1 or 2 year fixed accounts (although personally the paltry extra interest that might be available doesn't seem worth the cost of tying money up for so long)

OK, so the house is insured, what about you and your partner?
You can get accident, sickness and unemployment insurance - these will typically pay income for 1 or 2 years.
You can get longer term income replacement insurance - these pay an income potentially until nominated retirement age (I think the bar can be quite high to maintain a long term claim)
You can get critical illness insurance - these pay out a lump sum on diagnosis of major illnesses
Then life insurance - lump sum on death
Do you have children - what happens if one of you is incapacitated or worse?

Reaper

It rather depends how easily you think you could find another job. If you have skills that are in demand and could land another job quickly (even if not such a good one) then the need for backup money is less than if you think it will take a long time. Also redundancy will usually pay a lump sum depending on length of service which helps a bit. I'd go along with 6 months as a rough guide though.

Although vectistim lists other insurances some of them can be expensive, don't pay out for a while, don't last long, and have exclusions so you would need to study the small print.

Life insurance is more straight forward and worth it if you have dependants who could not manage financially if you were to get run over by a bus.

kidmugsy

It used to be standard to at least take out enough life insurance to cover the cost of clearing the mortgage on the death of the first of you. Do people still do that?

somethingcorporate

I have done - full cover for the rental house and more than enough provision via pension if I were to die.

We have about £20k in available cash we can lay our hands on. It's generally tied up in NS&I, S&S ISAs etc but it is there for an emergency. This should last us 6 months if we were both to lose our jobs but mine is very secure.

atush

Another thing is, do you won now? or are you saving to own? Will it wipe you out when you do?

I agree, 6 months is good. But although your house is 'insured' for damages, it probably wont be insured for routine maintenance (ie servicing boiler once per year), replacements to white goods, etc. So these, if they are to be covered by the emergency fund should be replaced afterwards. These should be in easy access cash ISAs of you both pay tax.

Then you have long term. Do you have work or personal pensions? S&S Isas?

marathonic

Having just bought a house, I have no emergency fund and all cash is being eaten up by things for the house at the moment. My plan is to start a cash ISA in April and contribute the max allowable to it. The 470 per month will turn into £5,640 (+interest) in a year and this will be my emergency fund – enough for 6 months essential living expenses.

If I’m out of work through illness, my companies income protection plan starts payouts after this 6 months.

Rich1976

A_Couple_In_Love wrote: »

Hi,

Been discussing with my partner this morning about planning to save for a "Rainy Day".

We will have our own house, on a mortgage, and worried about if one of us gets made redundant.

How much money do you all have roughly as a back-up to cover your self?

Our house will be Insured so not thinking too much about covering the costs of major damages etc.

If you don't mind, could you please put an estimate of what you have saved for "a rainy day". If not, please could you advise me on a rough guide of how much to save.

We are not too interested in other insurances apart from our house insurance, we want to save our own "back-up money".

Thanks.

Me and my OH have an unemployment insurance policy which costs us £37 for me and £25 for her.

This should in theory pay out for 12 months if either of us get made redundant. We don't have enough savings to cover 6 months which is why we took the insurance.

Problem is if you save now and get made redundant before you have saved enough up - how will uou manage to pay the bills.

Plus you don't know how long it will take to find another job.

we took the insurance as peace of mind and if we have enough savings we can use them as back up