According to a Taking the Pulse of the Nation (TTPN) survey from May 2023, almost 30% of the respondents aged 18-44 reported to be financially stressed early this year. 1
In these uncertain times, it’s more important than ever to start building that emergency fund. We know it can be hard to dedicate the mental space to your rainy day fund, but we’ve got a few tips to make it easier.
Why do I need an emergency fund?
Things like travel, a house, or a new car might seem like more exciting savings goals than cash for an emergency. No one likes to think about coughing up hundreds of bucks for a sudden car repair, or paying for expensive and unexpected dental work.
But for those reasons, you may find it helpful to have easy access to cash in your emergency fund. As we navigate this difficult period, your cash flow may not always be constant. Staying prepped is the best way to arm yourself against what you can’t predict.
How much do I need to save in my emergency fund?
Generally, you should plan to save enough to cover a few months’ worth of expenses. That’s things like rent, energy bills, phone plans, food, and other living costs. Also consider any large costs that may come up, like car repairs or medical expenses.
How much you should set aside in your emergency fund will depend on your own circumstances. You should have enough to ensure that you can handle any expenses that could arise.
How to build an emergency fund
Start putting what you can towards your emergency fund and, sooner or later, it will build over time. Even putting aside just $10 a week (or a couple of cups of coffee!) into your emergency fund will turn into $520 after a year, plus you may be able to earn interest on that amount depending on the terms & conditions of your bank account.
Home loan customers could also choose to keep their emergency funds in an offset account, which may help reduce interest paid on their eligible home loan.
How to save for a rainy day fund
Cut something from your spending
Cooking your own lunch instead of having it delivered just one day a week could save you $10 a week, or $500 a year. Pick something you can live without and use those savings to build your rainy day fund.
Take the thinking out of it
One method of managing your budget is to split your cash across multiple sub-accounts of your Everyday Options transaction account. Alongside sub-accounts for things like savings and utilities, one could be dedicated to groceries. If you check your last few shopping receipts and figure out your average spend, you can make sure you keep that amount aside.
Shop around
Shopping isn’t usually associated with saving. But when it’s shopping for the best deal on things like your energy, phone, and internet providers, you may end up saving rather than spending. Don’t hesitate to ask your current providers for a better deal or check what the competitors are offering. If you manage to find an internet provider (with as good as service) for just $10 less a month, that’s $120 a year back in your bank account!
Pay off debt
Credit card and personal loan fees and interest can add up when left unpaid. Before focusing on building an emergency fund, depending on your circumstances, you may be better off by focusing on reducing your debts. This may help you take steps to put additional savings towards your emergency fund!
Read your ways to riches
Got a pile of books bought ambitiously over summer that you haven’t touched? Try swapping out a month or two of paid television streaming and commit to reading instead (make sure you first check if there are any cancellation fees associated with cancelling your television streaming service!). Who knows – you might even find a book that’s such a page turner, you don’t need to re-subscribe to the streaming service at the end of the month!
Published 6 April 2022
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Deposit products issued by Suncorp Bank (Norfina Limited ABN 66 010 831 722 AFSL No 229882). Terms and fees apply. Read the relevant Product Information Document and Terms & Conditions before making any decisions about this product. Any advice does not take into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.
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