Life is unpredictable, and unforeseen emergencies can happen at any moment, and often our savings can suffer when funds are needed quickly. Being financially prepared for various emergencies is essential and can make a stressful situation much more manageable. Five crucial life emergencies you should budget for include:
1. Medical emergencies
Health issues can happen suddenly and lead to hefty medical bills. Even with private health insurance and government rebates, medical treatment can be costly.
2. Job Loss
Losing a job can severely impact your financial stability, especially if you are making regular repayments towards rent or a mortgage.
3. Home Repairs
From a leaky roof to a broker air-con, home repairs can quickly become a huge expense.
4. Car Repairs
Whether it’s a certain part not working or prang that needs fixing or a bigger issue altogether, cars often need repairing at the most inconvenient of times.
5. Natural Disasters
Natural disasters like floods, bush fires and storms can devastate homes and communities. While you can't predict when or if they'll occur, having an emergency plan and budgeting for potential evacuation or repairs can help alleviate financial strain.
Tips for establishing your emergency fund:
- An emergency fund should be a separate savings account, away from your regular transactions and savings. Nickname your account so you clearly know what the purpose of it is and avoid dipping into it for purchases or expenses that aren’t emergencies.
Check out our range of Savings Accounts to help get you started. - Your emergency fund is something you can build over time and should be consistently maintained. Start small if you need and, to make it even easier, consider setting up an automatic payment to transfer funds directly into the account each time you’re paid.
- Consider how much you would like to have in your emergency fund and work towards that goal. Often emergency expenses can range from a couple hundred to thousands of dollars. While having three months of living expenses saved up may not be realistic with other cost of living pressures, ensuring you have a reasonable amount saved will still help when you need it most.
- While saving is important, having appropriate insurance coverage can alleviate the impact of certain emergencies. Reassess your home and contents insurance along with your health insurance regularly to safeguard yourself as your personal circumstances change over time.
Visit our website to learn more about Insurance that helps cover you, your family and the things you love.
Auswide Bank Ltd ABN 40 087 652 060, AFSL No. 239686. This information provides general advice only. We do not provide advice based on any consideration of your personal objectives, needs or circumstances.
