Life emergencies you probably haven’t budgeted for
If the last few years have proved anything, it’s that you never know what’s around the corner. Or, as Frank Sinatra famously put it, “you’re riding high in April, shot down in May”.
By its very nature, there’s no way to tell how or when the unexpected will strike. But that’s not to say you can’t be prepared. In fact, building an emergency fund might just be the most important thing you can do for financial peace of mind.
Once you’ve got a decent-sized lump sum in reserve, unexpected life events like losing your job, medical emergencies, or car repairs aren’t quite as worrying as they might otherwise be. And you won’t have to get yourself into debt to deal with them.
In this article, we take a look at some of the more common unexpected life events and what you can do to protect yourself from them financially.
Losing your job
Whether you’ve been busted dissing the boss on socials and got fired, or just become the latest victim of “corporate downsizing”, losing your job can be a shock to the finances. Unless you get a nice payout (or you’ve got an emergency fund tucked away), money can get tight very quickly without a job.
A bouncing bundle of joy can be a completely unexpected surprise or just something that’s happened sooner than planned. Either way, the growing list of baby-related expenses (nappies, doctor’s bills, baby furniture, etc..) and the loss of income to one of you can make life pretty tough if you’re not financially prepared.
Surprise city move
Sometimes opportunities come out of nowhere that are just too good to refuse. A job in a new city or overseas can give you invaluable professional and personal experiences. However, unless the company hiring is prepared to cough up for your relocation expenses, you could be faced with a few unplanned outlays such as higher rent, a big chunk of bond money, or the expensive exercise of setting up a new place from scratch.
Unexpected pet expenses
Our ‘fur babies’ mean the world to us. But when they get sick or badly hurt, vet bills can put added strain on the finances. Pet insurance can reduce the size of some of those bills, but you still need to pay them in full before getting reimbursed – and, depending on the treatment required, that could be a fair old whack.
Also, even if you do have insurance, your furry friend may not be covered for everything.
Your car breaking down or being in an accident can not only take your wheels off the road, but also cause a huge dent to your finances. Car insurance may cover you for accidents depending on who’s at fault, but when it comes to breakdowns, things can get exxy very quickly. Apart from the high costs of parts and labour, you may also have to fork out for Ubers while your vehicle’s getting fixed.
One day you’re living it up on the piste (that’s a skiing term, just in case you weren’t sure), the next you’re looking at a few months with your leg in a cast. Unexpected medical bills (and time off work) can come when you least expect it.
While health insurance is clearly a sensible idea, it can get pretty pricey. And, depending on your plan, there’s no guarantee your particular medical issue will be covered.
Splitting up with a long-term partner or spouse can be devastating. While there’s not much you can do to protect yourself from the emotional fallout, having an emergency fund will at least mean you won’t have to deal with money worries in the immediate aftermath.
On a related note, should you find yourself a single parent as a result of divorce or separation, Great Southern Bank is a participating lender in the Family Home Guarantee scheme, which allows eligible single parents to buy a home with as little as two per cent deposit.
If you’re renting, a broken boiler or leaky roof is someone else’s problem. But if you’re the landlord (of your own place or an investment property) that someone else is you. At the risk of stating the obvious at this point, an emergency fund means you can fix the issue without resorting to debt.
How Great Southern Bank can help
By now, we’re sure you’re convinced of the wisdom of having an emergency fund. But what’s the best way to go about building one? Opening a high-interest savings account is a great place to start. If you transfer a portion of your salary to it every time you get paid (or better still, schedule an automated payment), it’ll tick along nicely without you having to give it too much thought.
But if you really want to turbocharge your savings (and, frankly, who wouldn’t?), there are a couple of things you can do. One is to make sure your savings account pays bonus interest and, crucially, that you’re meeting the eligibility criteria every month.
Another is to make use of clever savings tools such as The Boost and The Vault. With The Boost, you simply set an amount between $0.01 and $5 to automatically transfer to your savings account every time you use your Great Southern Bank Visa Debit card.
Once you’ve done this, you’ll be adding to your emergency fund whenever you buy a coffee, groceries, petrol, or anything else. Nice!
The Vault, on the other hand, won’t add to your fund, but it can help prevent you dipping into it by hiding your savings account. You can even create a motivational message to keep you on track. ‘HANDS OFF! EMERGENCIES ONLY!’ or similar would do the trick.
You can still access your money whenever you need to, though. It wouldn’t be much use for an emergency fund otherwise!
- For some great money-saving ideas, check out our Thrifty Thursdays page
- For tips on achieving your financial goals, try our Money Meditations page
If you would like to talk to someone about setting up an emergency fund, feel free to give us a call on 133 282. Alternatively, you can always pop into your local branch for a chat.
Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL and Australian Credit Licence Number 238317. Conditions, fees and charges apply. This is general information and does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information, including the Terms and Conditions (T&Cs) booklet, before acting on it. The Financial Claims Scheme may apply to this product; refer to the T&Cs for more information.