With 1.34 million Aussies applying for the COVID-19 superannuation early release scheme1, it highlights the fact that when events you have no control over arise, having funds set aside can be a vital resource to manage unplanned costs.
By building an emergency fund and preparing yourself for a financial setback, it can set you up to handle it with less stress, and bounce back more quickly when you need to recover.
It’s especially helpful to think about these plans at a time when things feel “normal,” even if it is a “new normal”.
Tips to jump-start your savings
If you don’t have an emergency savings account in place yet these 3 easy to implement tips can help you get started.
Assess Your Budget
If you have never created a budget, it’s well worth doing. It will give you an overall view of your finances and help give you control. Your budget should include how much you have coming in and how much is going out over a period of time. Drawing up a budget helps you work out where you can reduce your spending and plan for other expenses.
Pick one thing and cut it!
It sounds cliche, but everyday savings do add up! Understanding how to save more money is easy when you know where your money goes - it makes it easier to find ways to save with cheaper alternatives. For instance, could you cycle to work to save on petrol, make your lunch instead of buying it or cancel that sports channel you don’t watch anymore?
Due to recent social distancing and self isolation measures, you may have already reduced your discretionary spending, making now a good time to step back and reevaluate what you could do without. Calculate how much you are saving each month from your daily change, and capture that amount by putting it in your emergency fund.
Prioritize saving habits
Don’t stop once just because you’ve hit your initial savings target! Steadily increase your savings goals until you have put aside enough to create a significant buffer against unexpected emergencies. Could you apply your new savings habits for the next goal?