If your income has been affected or your outgoings have increased, building an emergency budget could help you feel more in control of your money now, and in the future.
Here are some steps to help you get started.
It's difficult to predict what’s going to happen, but start by estimating your spending over the next 3 to 6 months. This is likely to be different from your usual spending – a typical budget will usually include things like transport, travel and entertainment.
One of the best ways to predict how much you’ll need, is to look at what you’ve spent in the last month, rather than looking back any further. You can review your transactions in online banking, or on your statement. Remember to include any annual bills that will need to be paid, such as car insurance.
Once you have a list of expenses, group them into these categories, such as:
Once you have a list of all your costs, see if there are any areas you could cut back.
This could be any discretionary spending that isn’t absolutely vital for the coming months – gyms and subscriptions may be a good place to start.
You may also be able to find better deals on some of your essential expenses. Review things like your energy, broadband and phone bills, to see where you could save money.
Even if you’re in a contract, you may be able to negotiate a better rate with your supplier.
Many people are eligible for government support but don’t realise they are. You may think you need to be out of work to claim anything – but that’s not the case.
Based on government support and any other income you may have coming in, work out how much you will have to spend each month.
You may also be able to get refunds for any school trips, holidays or events you had booked that have been cancelled. If you don’t have travel insurance, you may still be entitled to compensation if you paid using a credit card. Any refunds you recieve could act as a buffer for any unexpected costs over the next few months.
Once you have a clear picture of your expenses, and the money you’ll have coming in, will you be able to cover your costs for the next 3 to 6 months?
Feeling confident you will be able to manage on this new budget? You can use any money you’re able to save to build an emergency fund.
If you’re concerned you won’t have enough money, it's okay. Now could be a good time to dip into your savings (if you have any). For example, if you have a fixed-rate savings account, you may be able to access your money early, without a charge.
If you’re an HSBC customer and need some further support with your finances, we’re here to help.
There are several government organisations and charities who can provide help and give independent advice about managing money. You can find out about free independent money advisers in your area from:
The following helpline services can offer help and advice:
If you need help with creating a budget, our budgeting planning tool can help you see where you’re spending your money, and any areas you may be able to cut back.