The importance of having an emergency fund

Having an emergency fund to support us is essential to deal with unforeseen circumstances, and it is precisely in uncertain times like the one we are experiencing that we can rediscover its importance, as happened to our Adeline, who has chosen to share her experience.

Can you tell us a bit about your family? What do you and your husband do?

We are a family of 3 living in London. My husband is Swedish and moved to the UK 14 years ago, he is a chef and worked in a few restaurants in London. I’m French and I moved here 12 years ago. I ran my food business for 9 years and then I joined Oval in 2018.

We had two really important life events in 2016: our daughter was born and we bought our first flat. This had a real impact on our saving and spending habits, as we had to think differently and we were responsible for raising a child.

How do you manage your family budget?

My dad always pushed us to save money. So I always save according to my life habits for my different goals (travel, buying a flat, baby…).

We always try to spend under 30% of our revenues toward our accommodation, that in London can be challenging. We have another part for recurring & flexible expenses, and we always set savings aside. As every household, we have all our recurring expenses such as child care (another big one here), travel cards, utility bills, taxes, groceries. We end up with more flexible expenses, like going out or entertainment for the family, and being both foreigners we travel often to Sweden or France to see our families.

We've always tried to keep our recurring and flexible expenses under control, and then we save the rest. We've now had a financial situation that satisfies the 3 of us for the past two years, so we decided to put aside any salary increases or bonuses. Once a year (or more if needed) we treat ourselves with something that we would all like with a maximum of 50% of those savings. We want to build an healthier financial situation for our family.

Were you able to build an emergency fund? How did you do it?

Yes, we did! We gave ourselves a doable target to start with, and simply raised the bar as our lifestyle changed. When we’ve reached our emergency fund target, we simply started saving for different projects like pensions, our daughter's education, buying a bigger house…

We are obviously using technology to help us manage our finances, and we are doing this super easily with Oval's Smart Rules, as you can increase or decrease them directly in app. We also have more traditional savings accounts with banks, but it’s a lot more hassle to change anything.

What was your situation during the lockdown? Were you both still working?

Our situation was a bit tricky, as we are in England the social support from the government isn’t as good as some other countries. My husband couldn't work as he works for a restaurant. The government unlocked some funds, but nothing was really clear on how much people would get until the very end.

Obviously we reduced some of our costs (childcare, travel, entertainment …) but some running costs remain. We will have to use our emergency fund. It really relieves the level of stress that everyone already has around the pandemic. And we are really glad to have this financial security easily build over the year by using Oval.

… and now?

Now we are back to normal work life and salaries, but it’s still very uncertain. We had so many friends that have been made redundant, so we are very careful on our spending. We keep focusing on our savings and this worldwide pandemic has motivated us to save more. We have re-thought our goals and are looking to build a stronger financial, with Oval always by our side.