Build an emergency fund

Life has a habit of throwing up bills.

The car needs fixing, the fridge gives up, or you’re between jobs for a while. None of that waits for a convenient payday.

An unexpected repair: If the washing machine dies, money set aside means you may not need to put it on a credit card.

A drop in income: If your income stops for a bit, savings can help keep the essentials covered.

Main point: An emergency fund is cash for those “of course that happened today” moments. It can help you avoid borrowing or selling investments when they’re down.

Why not just invest your emergency money?

Imagine shares fall 20% the same week you need A$1,000 for car repairs.

Keep emergency money easy to reach.: For a buffer, the main job is being there when you need it. An accessible savings account is often more suitable than shares, even if shares might earn more over the long run.

How much might you need?

Enter what you spend on essentials each month, then choose how many months you’d like covered. Three months is a common starting point.

You don’t have to reach the full amount straight away. A few hundred dollars set aside is a start.

Start with a bit of breathing room.

The right amount depends on your job, bills and circumstances. You can build up to it over time.

Set a first small goal: For some people, A$500 or A$1,000 is a useful first milestone. Start where you can.

Set up a regular transfer: Even A$10 or A$20 each pay can help if that’s what your budget allows.

Main point: You don’t need a huge buffer immediately. Start with an amount you can manage and build from there.