It's always a good idea to have a bit of money stored away for unexpected emergencies. Unfortunately for me, I have a potential upcoming emergency and no fund set aside!
Unless my situation changes and I find a permanent job rather than flitting from seasonal job to seasonal job, I will be completely without income for January. Even the Chinese restaurant where I work part time will be closed for the month.
Generally it is recommended that you make a list of all of your regular monthly expenses, such as rent, food, utility bills, fuel, insurance, etc., and then create a fund large enough to cover all of these outgoings for three months. This guards against loss of earnings, car repairs, expensive dental work, etc., etc. Dave Ramsey is a famous American financial counsellor and recommends setting up a $1000 emergency fund, even before paying off any debt. Whilst it's a good idea to save up three months worth, I only have three months until the start of January, so I'm aiming for at least enough to cover January's costs, just in case!
My outgoings for January:
Rent - £0. Fortunately if I am completely without income my parents would be able to let me live rent free for a short period of time. I am completely glad that I don't have my own place in a situation like this!
Car insurance - £56. Yes that's my monthly premium! It's my first year as the main driver rather than a named driver, so I have no No Claims Discount and I'm still under 25. :(
Mobile phone - £17. This is my main source of contact for potential employers so I don't want to give up my contract for a month.
Fuel - £100. I'm budgeting a normal month's fuel consumption because I would be on the hunt for jobs which will (hopefully) involve driving to interviews!
Living - £50. This will cover a few items of food each week to contribute to the house.
Small buffer - £25. Just in case something (else) comes up.
= £248 so budgeting £250 in total.
I'm aiming to have a £250 January emergency fund by the end of the year. I already have £70 saved from tips and some money that I haven't yet put in the bank. If I put away £10 for each of the 13 weeks left I should have £200. This will mean I'll only need to earn £4 in tips per week to make it up to £250 (averages £10-20 so this shouldn't be a problem).
All extra money will be saved rather than spent, which includes tips, extra fuel money (unlikely but still!), birthday money (November), spare living costs, any money left from the Christmas budget, etc.
Even with this emergency fund, I REALLY need to find another day job. My projected finances if I just continue on with the Chinese restaurant and the hotel next summer is looking even bleaker than they are now! GRRR!