The expert urged people to set aside money in case of emergency expenses
HSBC shared money-saving advice for customers (Image: Getty)
A HSBC manager has highlighted the importance of maintaining an ’emergency fund’ and the recommended amount that people should aim to set aside. Designed to help manage unexpected circumstances, such as redundancy or large bills, emergency funds are becoming increasingly widespread, although the amount varies based on individual needs.
HSBC’s website explains: “Building an emergency fund can help prevent you needing to borrow money or make difficult financial decisions in those moments, by giving you savings to fall back on. How much you need, and what an ’emergency’ is, will depend on your situation.”
However, a good rule of thumb is to aim to save at least three months’ worth of living expenses. In a video shared on HSBC’s social media, an HSBC UK Personal Banking Manager named Rupi broke down how much it’s recommended to save and why.
In a TikTok video, a HSBC UK Relationship Manager named Gaynor asked: “How much money should you have in your emergency fund?” Rupi replied: “So they generally say you can have at least three to six months of your living expenses inside your emergency fund. Remember that this emergency fund is to save you from any shortfalls or surprises that life might throw at you.”
Sharing a few examples, Gaynor pointed out that this might include car troubles, unplanned travel expenses, and job losses, reports the Express. Rupi agreed: “Exactly, it would cover all them options for you.”
Many people build an emergency fund for ‘peace of mind’ (stock photo)(Image: Getty)
In response, Gaynor added: “I also think for high earners as well, they typically have higher expenses, so having that solid emergency fund is really key for your financial plans.” Rupi agreed: “They have bigger responsibilities, so it is all about what your living expenses are and what you can do to cover them, and could you cover them comfortably for around about three to six months.”
In the caption, HSBC emphasised that saving an emergency fund can provide ‘peace of mind’. It read: “An emergency fund isn’t just a safety net, it’s a piece of mind.”
More advice is available on HSBC’s website, including tips for anyone who needs help deciding how much to save or who wants to start saving. HSBC said: “It may take you a while to save up, but even a small emergency fund is better than nothing, so don’t be discouraged.”
Content cannot be displayed without consent
Some people might find it helpful to open a new savings account. HSBC explained: “You may want to open a separate savings account for your emergency fund so you’re not tempted to dip into it. Ideally, you want to be able to access the money quickly, if you need it – so you don’t want it to be in a locked savings account or invested.
“A good way to stick to your savings plan is to set up a standing order to move money into a savings account each month. If you schedule it for the day you get paid, you’ll lower the temptation to spend it.”
It’s advised to assess your fund regularly in case your circumstances have changed. HSBC said: “Your expenses can change, so what was 3 months’ worth of expenses a year ago may no longer be enough.”