Author: Matthew Simpson-Foster
Having some extra cash on hand for emergencies is an essential part of your overall financial health so that you can fund living and spending expenses short-term should something unexpected occur.
Having this cash reserve is essential for all stages of your life: from your 20s all the way into retirement.
You never know when an unexpected cost will come your way that can put a dent into your financial plan which can make it difficult to get back on track.
Preparing For the Unexpected
The COVID-19 pandemic has taught many people a great deal about their financial situation. Unfortunately, job loss and redundancies have been far-too-common in the last couple of years As thousands of people dealt with job losses, fewer hours, retirement plans forced on hold, and lower incomes, emergency cash reserves have become an increasingly vital safety net.
No matter what financial hurdle you need to overcome, our financial advisers on the Central Coast will be glad to provide you with some valuable tips on smart saving and financial preparation.
The Importance of Having an Emergency Savings Fund
If you are ready to build your emergency fund from scratch, here are five steps to take to make the process easier:
1. An Emergency Fund Will Help You Keep Your Financial Goals on Track
No matter what financial goals you have, an emergency fund can increase the likelihood of you achieving those goals.
Over the last 2 years, it has been devastating to see some people’s retirement plans being put on hold and people struggle to finance their rent and mortgages. While this was a difficult financial challenge to prepare for, an emergency fund in times of strife can go a long way.
Challenging times can become less stressful with a cash reserve and they can help you stay on track to reach your goals – big or small!
2. Have Confidence and Peace of Mind
There is nothing worse than money stress.
The financial stability and peace of mind that comes with an emergency fund is one of the greatest benefits of starting one. You should think of an emergency fund as money put aside for unexpected costs such as medical bills or insurance policy excess in the case of accident, crisis, or job loss.
3. Only Use it for Emergencies
Don’t be lulled into a false feeling of financial security and allow spending to creep back up once you’ve built up your fund. It can be easy to take funds out of your account but this can become a dangerous and costly habit.
Having a sufficient emergency fund is essential to your financial security.
4. Set it Up for Quick Access
An emergency fund, by definition, is cash that you can access rapidly.
While it may be tempting to put it into an investment to grow the money, this may mean you can’t access it when you need it.
You may like to consider putting it in an everyday savings account so that you have access to it whenever a costly emergency presents itself.
You never know when something unexpected will happen in your life. Saving for an emergency fund might help you feel more in control if an emergency occurs. A little bit of extra can go a long way!
Consider consulting with financial planning services providers like Central Coast Financial Planning Group. We can help you keep on track of your savings and cash flow to help you achieve your longer-term financial goals. Talk to our advisers today to get started!
Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.