If we have learnt anything from COVID-19 it’s to expect the unexpected. This year has left us all feeling a little less sturdy than we might like, so having some cash set aside as an ‘emergency fund’ might help to set many Australian’s minds at ease.
As nice as it might be to have a pool of money to draw from, finding the funds to get through an emergency often means compromising somewhere else. Here are a few ways you can reshuffle your finances to be ready when you need to be.
How much to put into an emergency fund
This figure will be different for everyone, so rather than thinking of a cash amount, it’s better to focus on a length of time. First, decide whether you need to be covered for a matter of weeks or months. Then look at how much you’re spending on your essential outgoings – mortgage or rent, groceries, medical bills etc. This will help you come to a target savings figure that meets your needs, suits your lifestyle and will give you peace of mind.
There are a number of budget calculators and tools you can utilise to track your spending like the Money smart calculator. We provide a client wealth portal through https://myprosperity.com.au/ which we can talk you through and see if it is right for your needs.
Accessing some of your finances to set up your emergency fund
This is the tricky part, but there are a few things that you can do:
Where to keep your emergency fund
The best-case scenario is to have assets that are immediately at your disposal. You might choose to store them in a savings account so that your money continues to grow until you need it. Opting not to have a debit card associated with the account could help reduce the temptation to spend the cash on non-essentials.
If you’d like to discuss setting up or relooking at your emergency fund, please get in touch with our Oran Park office.