How to save for an emergency fund
With New Zealand in reoccurring lockdowns, you may be slightly more aware of how you spend your money on a day to day basis, as well as your savings. We have a simple list of questions to get you thinking about saving for an “emergency fund” so that when you need it, you know you’ll be sorted.
How much money will I need?
Anywhere from approximately 3 – 6 months is a good starting point. Bear in mind the size of your emergency fund will greatly depend on your circumstances. You will most likely have greater expenses if you have a family to support vs if you’re single or living in a flat with shared bills.
Don’t get overwhelmed
Be realistic about how long it will take you to save for an emergency fund. It won’t happen in one week. Make a long-term plan for your savings, and stick to it. Start with something obtainable, something as small as $20 a week and might be surprised how quickly small and regular savings can accumulate!
Have a budget for all your spending
Using a budget to plan your spending and sticking to it not only helps make ends meet, it enables you to reach goals for the short, medium and long term. It will also help ensure you don’t overspend and can identify your spending habits. If you’re spending too much on TV subscriptions or coffee, you may wish to redirect those habits into your emergency fund.
Use spare money wisely
If you get a pay rise, or a bonus from work, or even a tax refund, you could add the money to your emergency savings rather than spending it on a weekend of fun or an impulse purchase.
Separate money into different accounts
Set up a separate a savings account that you cannot access on your eftpos card – this way you won’t be tempted to dip into it if your everyday accounts are running low.