A new year gives us plenty of opportunity to look ahead to the future. New Year’s resolutions can easily get broken, but there’s no doubt it’s good to set goals and intentions for a new year. One of the things I encourage is the putting aside of money for an emergency contingency fund. An emergency fund is there to protect you IF things go wrong – I see it as a savings buffer.
ME’s latest Household Financial Comfort Report shows that one in four households have less than $1,000 in cash savings.
We all need to look after ourselves, and that includes protecting ourselves financially. No one likes stressful situations, but life never goes the way we plan. An emergency fund gives you a financial safety, as well as peace of mind.
As we roll into 2019, here’s some advice:
Ensure you have savings for at least three months of living expenses in case of unemployment or disability. Three months would be the minimum – six months is ideal.
The secret to building this fund, is to start small and save regularly. It doesn’t have to be a huge amount, just syphon away a weekly sum of money. You can always set up a direct debit into a separate account to achieve this.
It’s vitally important to have a stash of funds if you’re self-employed or a contractor, in case work dries up.
The unexpected does happen – especially if you own a home. If your roof develops a leak or you need to replace an air conditioning unit, you’ll need to sort the issues out rapidly.
A serious medical condition may empty your health insurance fund, there’s always an excess to pay, and routine tests can add up quickly.
Australia is vast and you may have family members in other states. Catching a flight to see them if they need assistance, whether that be through illness or otherwise, can be expensive. An emergency fund will mean you can take off at the drop of a hat.
One of your biggest purchases, aside from a house is a car. Emergency car repairs can be expensive. If your vehicle dies on you, wouldn’t it be good to know that you have funds available to sort yourself out?
Any unexpected financial outlay won’t be welcome, but knowing that you have a fund will keep your stress levels down. This safety net means you won’t be living on a financial knife edge.
Here at TV Financial Services, we take a holistic approach with all money matters. While it’s important you have an emergency fund, make sure it’s not your only financial priority. If you’d like to discuss your finances further talk to me. I can help put you on the right path to success in 2019.