s WARNING: Do you really need a loan today?*

It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:

  • For information about other options for managing bills and debts, call 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.
  • Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
  • If you are on government benefits, ask if you can receive an advance from Centrelink:

The Australian Government’s MoneySmart website shows you how small amount loans work and suggests other options that may help you.

*This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009

What is an emergency savings fund?

Emergency savings fund is an amount of money that you have set aside in case you have any unexpected bills pop up. This way you won’t be required to borrow money when an unexpected bill or emergency happens.

So often we get relaxed and think we have more in our accounts or don’t really need to keep that money for a rainy day.

Stop that thought right there because that kind of thinking is what can get us in trouble when an actual emergency comes along and we need that money.

When building an emergency fund you need to consider:

emergency savings fund

How much my emergency fund should be?

Generally the idea is for your emergency fund to be around 3 to 6 months of your income. This will give you time to continue your status quo while getting back on your feet.

Keeping your emergency fund readily available is a good idea because it will allow you to access your funds easily in an emergency. Try and make it a separate account so as your not tempted to use it.

Set goals:

Set an amount you want to reach each month and set an amount aside each week so that it doesn’t seem like that big a deal.

Start a change jar:

Every time you have change lying around or you break a note and have change left over get into a habit of putting it into a jar and at the end of the month add it to your emergency savings fund, you will be surprised at how much you save!

Save your tax return:

Saving your tax return can give your emergency savings fund a real boost without much effort from you as it is bonus money!

emergency savings fund – Where can you save?

Can you cut back on costs anywhere? You could try taking your lunch to work instead of buying it! Make a coffee before you leave home instead of buying one on the way.

Put the money you would normally save on these things into your emergency savings fund.

Sell unused/unwanted items:

You could sell your unwanted items on gumtree or ebay this way you will be making your house less cluttered and you can put the money into your emergency savings fund.

Is that an emergency?

Don’t allow yourself to use your emergency savings fund unless it is an emergency. You need to make a list of things you consider as an emergency.

Uses for your emergency savings fund would be things like:

  • Unexpected bills.
  • Loosing your job and needing the funds to pay your mortgage/rent or bills until you get back on your feet.

Avoid spending your emergency savings fund on things that are not an emergency:

  • Bills that are expected each month like electricity.
  • A great deal on something you don’t really need.

Set up an automatic debit from your main account to your savings account. This way the money will automatically be put into your emergency savings account without you having to think about it.

Avoid impulse buying!

Shops are very clever at trying to get you to buy extra items because they are on special or they are the last of the stock. Avoid these tactics at all costs! Go in with a list of what you want and don’t leave with anything extra!

Budget, budget, budget!

Know where your money is coming and going and put any left over money into your emergency savings fund.

Finally, try to ensure you keep your emergency funds for just that an emergency and avoid using it for anything else. If you find yourself needing money for other things it might be a wise idea to set up another account that you can use for other things such as a savings fund for a holiday or new car, this way you can have all your bills paid off and have enough money left for a holiday!