If you want to create a better financial future, controlling debt is key. At Camori Investments we believe that if you aren’t paying unnecessary debt then you can invest surplus income into your superannuation, resulting in more income for your retirement.
One of the ways you can get out of debt and stay out of debt is to have an emergency fund. An emergency fund is money set aside for when things happen. This means that if you need money for an unexpected bill or an ‘emergency’ you have the money there, eliminating the need to go into further debt. A recent study found that only 53% of people would be able to cover a $400 emergency without selling something or borrowing money.
Our recommendation if you are in debt is to save at least $1000 for your emergency fund. If you have no debt, then aim for 3 – 6 months of living expenses. The key to getting your emergency fund up and running is having a plan. Here is how you can create your emergency fund super-fast.
Know exactly what money is coming in and what money needs to go out. This allows you to see at a glance how much surplus income you have.
You wouldn’t forget to include petrol or rent in your budget, but many of us don’t include savings. Make it a non-negotiable part of your budget and ideally pay yourself first.
When you have determined where your money is going, you can add any additional funds into your emergency fund until it’s reached your desired level.
From your budget you can see what money needs to go out. Look over it again and see where you can reduce spending or remove it. Do you really need a latte every morning or would twice a week be enough? Shop around on your regular expenses, such as electricity, to see if you can get a better deal. Any savings can be added to your emergency fund.
To keep you on track, record each and every dollar you spend. This will help you stick to your budget, grow your emergency fund and create a better financial future.