Cash for a crisis: building an emergency fund
An emergency cash fund is a top priority for many savers around the world. Here’s how to ensure you will always have quick and easy access to your money should the worst happen.
A common reason people contact Barclays International Banking for the first time is to enquire about offshore contingency funds that they can access quickly and easily. This may be due to political instability in certain parts of the world or the worry that a personal emergency may arise.
Whatever the problem, dealing with it may incur an unplanned expense – which is where maintaining a contingency fund can help. The fund should be readily accessible and you should hold it in the appropriate spending currency if possible. And, most importantly, it should be in a politically stable jurisdiction.
The first step you need to take when creating a contingency fund is to identify what kind of emergency might mean you need immediate access to a sum of money. Typical examples include: elderly relatives living in another part of the world who need urgent medical treatment; a child being educated overseas who needs an unplanned parental visit, or needs to return home suddenly; an overseas business problem that requires an immediate visit from yourself; or the need for you and your family to leave your country quickly.
How much cash should you hold for emergencies?
To deal with these types of situations, you’ll need to be able to access sufficient cash quickly and easily, without putting a financial strain elsewhere on your family, household or business. If you build a list of possible reasons for your contingency fund, you can start to calculate likely total costs and make plans to start putting that amount of money aside.
Contingency funds are also useful for covering a different kind of unexpected event: loss of earnings due to a health problem, business problem or redundancy. It’s wise to set aside enough money to cover your monthly outgoings for at least three months. This way, you will give yourself time to either recover or find a new job – or, in a serious situation, to draw upon further savings and investments that may take longer to access.
As the UK government’s Money Advice Service points out, if you have more than six months’ essential outgoings in your contingency fund then you may be missing the chance to earn higher returns. So, if you feel that you have more set aside for emergencies than you need, you may wish to consider investing that money instead, or putting it into an account that offers higher interest in return for less accessibility, such as a structured deposit.
Currency fluctuations will also have an impact on your savings, so it’s important to make sure you build up your cash fund in the right currency. Saving in the same currency that you are most likely to spend in will minimise the negative effects of currency movements that may occur over a period of time. You’ll also be able to cut the costs of switching in and out of different currencies when building up the fund and making withdrawals.
What to do next and how Barclays can help
So what type of savings account should you consider? A real emergency means you’ll need to have immediate access to your money.
Barclays International Reserve Account offers easy access to the money in your account with no notice required, as well as tiered rates of interest. If you’re an existing client of Barclays International Banking, you can open an International Reserve Account with a deposit of just £1, €1 or US$1. If you’re a new client, you’ll need to deposit £25,000 (or currency equivalent). Either way, provided you maintain a minimum balance of £25,000 across your Barclays International Banking accounts, you’ll earn interest on a quarterly basis1 and can deposit or withdraw funds whenever you choose without penalty.
Ask one of our Service Executives to explain how you can transfer money internationally into your emergency cash fund in the most cost-effective way. To do this, and to find out more about savings accounts with Barclays, please get in touch by calling +44 (0) 20 7574 3212*. Or, to open an account, call +44 (0) 207 574 3203*.
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