#1 Saving for a rainy day ☔

What do an umbrella and car repairs have in common?

Nov 18, 2022

Hello, and welcome to the very first edition of Tenets of Stoic Wealth. 😊

The aim of this newsletter is to build on some of the ideas relating to personal finance that I talk about in the visuals that I share on Twitter, LinkedIn and Instagram, while allowing space to get into more detail about how you can apply it to your own life.

This is not financial advice. It’s simply somewhere to learn about personal finance in a different and (hopefully 🤞🏼) more interesting way.

After all, it’s far too important a topic to leave to chance!

If you’re ready, we’ll jump straight in!

The Emergency Fund

One of the most important first steps you can take on your path to building wealth is creating your own emergency fund.

“A what??” you ask. “What am I going to need one of those for?”

An emergency fund is a bit like an umbrella, in that it protects you from the storms of life. Having money set by to pay for surprise expenses stops you from having to go into debt to pay for them.

How would you fare if you received a sudden bill of £1000? Or if you were made redundant and had to make ends meet until you could find another job, maybe a few months later?

If you think you’d struggle in these situations, you’re not alone. In a recent poll completed by Hargreaves Lansdown, 51% of British citizens either don’t have enough in their emergency fund, or even have an emergency fund at all…

Is it any wonder then that so many of us report feeling stressed out by money? At literally any point we could be faced with an unexpected expense and most of us barely have any money set by to deal with it.

Something as simple as a car repair could send us scrambling to borrow from friends and family, turning to credit cards or predatory loan sharks - taking you back three steps on your journey to building sustainable wealth in the process.

Building an emergency fund is one of the first things that you can (and should) do to stabilise your situation. It’s creating your own insurance, an easy-to-access pot of money that is always there for when you need it.

No forms, no claims, no lengthy wait times on the telephone.

“Sounds great!” you say! “How can I get myself one of these emergency funds?”

Like most things with personal finance, it’s much simpler than it initially appears…

Open a savings account (in a different bank)

It should be a savings account so you can access it instantly should you need it. This is NOT money to be investing.

Having it in a separate bank makes it less likely that you spend it on other things. If it’s in the same bank, it will be on the same screen when you log in to manage your usual account, and it can be all too easy to justify spending it on non-emergency items.
Grow it
To build it consistently, set up your main account to pay into your emergency fund every month, automatically. This could be £20, £50 or £100, whatever you’re comfortable with. The amount matters less than the automation.
Automatic contributions mean that the money is going into the emergency fund, come rain or shine. You don’t have to remember to do it, because it’s done for you.

As we’ll see later on, setting up effective systems is one of the key blocks to building wealth, but that’s a topic for another day…

And that’s pretty much it!

It’s not glamourous, it’s not sexy, but it is essential.

Because if you have a stressful relationship with money, how are you ever going to build sustainable wealth…?

Build your emergency fund first, so you can move on to focus on other things.

So you stress less.

So you can sleep at night.

So you stay dry in the storm.

And that’s it for this edition of Tenets of Stoic Wealth.

I hope that you enjoyed it, and please feel free to share with any friends, family, third cousins and pets who may find it useful! You can do that here:

If you have any thoughts or feedback, I’d love to hear from you! You can either reply to me here or reach me at my email hello@stoicwealth.co.uk

See you all in the next one!

Felix