Building an emergency fund in a pandemic

Most of us don't have enough stashed away to weather the tough times, especially one like this.

Building up an emergency fund is a challenge even in good times, but right now it's harder still. So a different approach is needed. It's time to try and set aside whatever cash you can now to help you through the coming weeks and months.

Looking after those pennies has never been more important. So what can you do about it?

Get to grips with your income

If your monthly income is likely to change, try to understand how much, and for how long. This will help you figure out the impact it will have on your budget. There are lots of calculators out there, but we have included one here to get you started.

If you can afford to set aside any one-offs or extras, such as bonus or commission payments, it can be a lifeline in troubled times.

Break open the piggy bank

Many people have small balances in places like PayPal, piggy-banks, or premium bonds. These can all be valuable sources when it comes to adding money to your emergency fund; so add it to the pot.

Check your credit cards

Let's hope you don't need to use them. But just in case you do, keep a mental note of the credit you have access to. If you have more than one card, use the one with the lowest interest rate first.

Get tough with your spending habits

Cutting back where you can is always a great idea, and now more than ever. Do you really need all those subscriptions right now? Are you getting the best deals on your utilities and insurance? What about your credit cards, is there an opportunity to switch to something cheaper?

These small savings add up, so go through it with a fine tooth comb. Most of us have areas we can cut back on temporarily, just remember to set aside any savings you make.

Review your investments

This is a tough one, as cutting back on pensions and investments is not normally advisable. But extreme times might call for extreme measures.

If you need to cut back, only do what is necessary to make life easier. Make sure you set a reminder to reinstate them when the clouds lift. As with the rest, plough any savings you make from the reductions back into your emergency fund.

Take a break

There is a lot of help out there. Mortgage lenders are obliged to give a 3-month payment holiday, and lenders and utility companies also providing payment holidays to those that are impacted. The key here is to speak to them if your payments are likely to be impacted.

Get help if you need it

The government has announced some pretty extraordinary measures to help us through this pandemic. Check out what support you are entitled to and make sure you are claiming it. Keep your emergency fund topped up with any back payment you get and any residual income.

Then what?

It's really tough out there but even a small saving of £250 can significantly reduce the risk that a family will miss paying bills.

Whatever you have managed to pull together into your emergency fund will help top up or subsidise your income. It will provide you with a financial cushion to see you through the coming weeks and months, if and when you need it.

At Multiply, we've made some changes to the financial advice we give, to try and help our users make the best decisions for them during these challenging times. We will be writing to tell you about those in the coming days. Most importantly through all of this keep safe, be kind and look after yourself.