Money

How To Build Your Financial Lifeline And Keep It For A Lifetime

Don't have an emergency fund? Here's what it is, and how you can get there.

By Bryna Howes

Money

Don't have an emergency fund? Here's what it is, and how you can get there.

By Bryna Howes

Whether it’s because of, oh, Mercury retrograde, or just life in general, there’s one thing we can all agree on: sometimes things go horribly wrong. And those moments can take us by surprise. Such surprise, it seems, that about 37 per cent of Australians would be unable to handle the major unexpected expenses that could come along with these moments, according to a new report from the Commonwealth Bank.

If this sounds familiar – or even if it doesn’t – it could pay (literally) to ensure you’re planning properly. This means knowing what an emergency fund should look like, setting your savings goal, and taking steps to ensure you’ll meet this goal and lose that “37 per cent” label for good.

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Of course, what constitutes an emergency will look differently to everyone. But the gist is that it’s an unexpected event. Something you can’t really plan for. You know something will happen at some point – because life happens – but you don’t know what it will be and you don’t know when. A broken down car, urgent surgery, a leak in the roof – these are the type of things you won’t see coming and therefore can only plan for by way of emergency savings. A trip to Bali? A new sofa? These are things that won’t pop up suddenly and you can plan for separately. In other words: not an emergency.

It’s really important you keep one thing front of mind: your emergency fund is for emergencies! It seems so obvious, but it’s oh-so-easy to forget and dip into your fund because you’ve got another fancy dinner out or you want a quick weekend break by the beach with your friends. First you skim a little off the top, then a little more, then you’re back to square one. So, once you’ve made a plan to build and grow your emergency fund, stick to it like white on rice. Don’t stray from the track. There’s a light at the end of the tunnel… and it includes champagne.

You’ve hit the glass ceiling. And our paywall.

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