Sorted Money Month is an annual public awareness and engagement campaign coordinated by Te Ara Ahunga Ora Retirement Commission which runs Sorted. It supports the National Strategy for Financial Capability’s role in helping New Zealanders to improve their financial wellbeing and resilience by providing a dedicated month in which to increase engagement with money matters.
The theme for August was ‘The difference is an emergency fund’.
Some key emergency savings tips:
- The more you can set aside, the more unexpected costs you can cover.
- Give yourself permission to use your cash cushion when life happens – that’s what it’s there for, after all.
- Credit cards or overdrafts don’t bail you out in an emergency that well – you end up running up costly debt that has a way of sticking around.
- Unexpected costs can upend your long-term plans, like buying a home or saving for retirement, so it’s best to be as prepared as possible.
- There’s not much point working towards your dreams if your progress gets wiped out when something unexpected comes along.
- Don’t sweat the small stuff!
- Insurance is for bigger risks, but for smaller things, we can ‘self-insure’ to cover ourselves and those we’re closest to.
- Tapping into your KiwiSaver in tough times needs to be your last resort. Building up a cash cushion helps protect your progress.
- How much should I save?
That really depends on your lifestyle. As a rule of thumb, you may want to cover three to six months of your expenses. Keeping it in a separate account helps avoid the temptation to spend it on non-urgent expenses.
