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What is a safety net?

Simply put, a safety net is a small reserve of funds that you have put aside over a period of time in order to help you out in an emergency. This can range from an unexpected bill, or even loss of employment.

It is a savings fund designed specifically to be used in situation like these in order to help you pay the cost without it eating in to your monthly budget, or pushing you into debt. In order to cover all eventualities, your safety net should be between £3,000 to £5,000, or at minimum, the equivalent of one full month's worth of outgoings.

Why would you not have one?

For a lot of us, just getting by from month to month is financial strain enough. Not everyone has enough money left over at the end of the month to put into a savings fund.

Moreover, saving for a new car or a summer holiday is easily prioritised over a safety net fund, as these are activities that either bring joy, or serve a quantifiable everyday purpose. Additionally, the crises that a safety net fund is preparing for may never even actually happen. For this reason, those precious pennies can easily be scooped into a holiday fund at the end of the month, rather than a safety net fund.

What are the consequences of not having a safety net?

Unsurprisingly, the consequence of not having a safety net, is that you will need to find emergency funds from another source. Whether it be your pay cheque or another savings account.

Your possible options for when an unexpected expense comes in are the following:

1. Use your monthly income

If you have wiggle room in your pay cheque then this probably isn’t too much of a worry for you. It may mean you will need to cut back on nights out, or eat ramen a few nights a week, but if it’s a cost you can absorb by just making a few small changes in your monthly habits then good for you.

2. Ask if you can split the cost across months

Maybe your margins are a bit tighter, or the cost is an exceptionally large one. In this case, go back to the company involved and enter into discussions with them. Usually, depending on your history with them and the nature of the expense, they are open to discussions about alternative ways to pay your debt. At the end of the day, what’s important to them is that they get paid. Monthly instalments are a good way to spread the cost more evenly, and it avoids you having to absorb a big hit all at once.

3. Borrow from friends and family

This is not an option for everyone. However, if you are in a fortunate situation where friends and family can help you out, then consider reaching out to them to ask for help.

Our advice on borrowing from loved ones is make sure you discuss the repayment terms thoroughly before you take a loan. In some cases even drawing up and signing an unofficial agreement can clarify the terms in the minds of both parties. Once you’ve paid your unexpected expense, make sure that your first priority is to pay back that loan you have taken out. It’s no secret that money can make even the sweetest relationships turn sour, so take the loan seriously. Don’t take advantage or your loved ones, or put yourself in a position where you’ve borrowed more than you can reasonably repay.

4. Payday loans

Hands on hearts, we cannot say that we fully endorse this option. Payday loans have some of the highest interest rates in the world of money lending, and can easily catch you in a vicious cycle of debt if not paid off immediately. They can be great if you are strapped for cash at a particular moment in time, but you know without a shadow of a doubt you will have the money to pay the loan back in full in the near future. However, they are not a wise option if you are using them to hold you over from payday to payday, or if you won’t have the cash to pay them off in the near future.

Only consider this option if you know you can pay the loan off in full within the grace period, and it wont drag you down into a cycle of debt trying to pay off astronomical chunks of interest.


Honestly. Just build a safety net. It doesn’t have to be big. 5k is recommended for most, but it can be as little as 3k. Once it’s full you can forget about it until you need it, and instead channel your funds into something that you feel is more fun; like a holiday fund. But it’s important to have that safety net there first to protect you from payday loans, debt, and the fear and anxiety that come with worrying about money. You never know when an unexpected cost will crop up, so always make sure you have something to fall back on when it does.

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