How Much Do You Need?

Even if you can only save a little, start now and keep saving regularly. For instance, putting away $20 a week into a dedicated savings account will give you over $1,000 in a year. That’s a solid start! But ideally, aim to have enough in your emergency fund to cover three months of expenses. This provides you with a comfortable financial cushion.

Tips for Building Your Emergency Fund:

1. Set Up a Separate Savings Account: Create a high-interest savings account specifically for your emergency fund. Having a separate account makes it less tempting to dip into it for everyday expenses.
2. Automate Your Savings: Arrange an automatic transfer from your main account (where your wage is deposited) to your emergency fund. Set it and forget it—watch your fund grow!
3. Maximize Your Offset Account: If you have a home loan with an offset account, consider using it as your emergency fund. This not only lowers your home loan interest payments but also allows quick access to your money.
4. Keep Adding to Your Fund: Whenever you receive extra money (like a tax refund), use it to boost your emergency savings.

When to Use Your Emergency Fund:

Keep your emergency fund for expenses that need immediate payment when other funds aren’t available. If it can wait, save up for a few weeks and pay from your saved money instead. And remember, if you do dip into your emergency fund, be sure to top it up again afterward.