Irish Indo recommends borrowing rather than spending SSIA

[polaris]

Well the nature of an emergency means that one needs the money straight away. There's no guarantee that someone will loan the money at a future date. Also there is the security involved in knowing that a rainy day fund exists. Personally, I'd never leave myself without money in the bank. Then again I don't have any loans except mortgage and would save for anything I needed. That wasn't always the case when I was younger though.

If you don't mind me asking roughly how much is your emergency fund. We keep about €2k in the bank for this purpose as we both have PHI, income continuance protection, and life assurance.

One of us recently inherited about €50k which we used to reduce the mortgage but some people were advising us to hold onto some of it.

 

[ClubMan]

If you don't mind me asking roughly how much is your emergency fund. We keep about €2k in the bank for this purpose as we both have PHI, income continuance protection, and life assurance.

What is a suitable "emergency" fund will depend on each individual's circumstances. Some people use the rule of thumb of having a few months living expenses to cover periods in which they might find themselves out of work and while they find a new job. Ultimately it depends on your normal living expenses, lifestyle and how much you could pare back on discretionary spending in the event of some unexpected reduction in your income. Don't forget that many people are entitled to Jobseekers Benefit/Allowance and possibly other welfare payments which, while not huge, do help.

One of us recently inherited about €50k which we used to reduce the mortgage but some people were advising us to hold onto some of it.

What people? Are they qualified to give you financial advice?

 

[liteweight]

As Clubman says the amount depends on your living expenses. I'm a bit of a worrier so I like to keep at least 3/6 months gross salary in a high yielding account. I don't mind transferring or drip feeding it, in part, to one of the high interest regular saver accounts. Also we own apartments, so we have to take 'voids' in tenancy into account.

With regard to paying 50k off your mortgage...my own opinion is that this will save you far more in the long term than keeping the money on deposit. It also gives you peace of mind to some extent. The trick is to do something with the money you save. It's probably not a big reduction in mortgage payments but by putting this amount aside you develop a habit of saving....perhaps enough to pay off your next lump sum.

Lots of people have advice to give when it's not their own money. Suddenly everyone's an expert! As long as you really take time to think financial decisions through, even if this means paying an independent advisor and, you're happy with the result, then IMHO that is the main thing!!

 

[polaris]

What people? Are they qualified to give you financial advice?

No, these were just friends.

I was just wondering if people were keeping 5/6 digit sums of money stashed for a rainy day. However, I take the point about people's circumstances being different.

With secure jobs in the public sector and having health, mortgage, income and life insurances in place, I guess our emergency fund doesn't have to be very large.

 

[liteweight]

No, these were just friends.

I was just wondering if people were keeping 5/6 digit sums of money stashed for a rainy day. However, I take the point about people's circumstances being different.

With secure jobs in the public sector and having health, mortgage, income and life insurances in place, I guess our emergency fund doesn't have to be very large.

A six figure sum would be a very large rainy day fund indeed! We have a 5 figure sum but we feel it's warranted. You're in a lucky position with regard to job security etc. so perhaps you don't need such a large amount.