Saving For A Rainy Day
I don’t know about you but when it comes to money, I have my good and bad points. For example, I’m great at paying bills on time but not great at saving.
Of late I’m feeling financially vulnerable as my emergency fund is looking pathetic. I have very little tucked away for a rainy day but it appears I’m not alone.
A recent survey found that one in three Australians do not have savings yet claim they need six months’ worth if disaster strikes (the MasterCard Money Management Index )
Likewise, research by finder.com.au is even more depressing showing one in five Australians don’t have enough saved to cover even a $500 setback – that’s 3.6 million adults nationwide.
Bessie Hassan, Money Expert at finder.com.au, says the findings are ‘alarming’ – and proof that it’s very tight for many Australian households out there.
Shockingly, almost one in eight Australians (12%) have less than $100 on hand for an emergency.
When asked about unexpected situations that had happened to them, almost a quarter (24%) of Australians said they had experienced redundancy.
Other financial emergencies experienced by the respondents were dental work (18%), illness not covered by Medicare (11%), burglary (11%), accident requiring surgery (11%), booking emergency flights at short notice (10%), lost wallet/money/passport while travelling (9%), loss of expensive smartphone (8%) and an unexpected bill (8%).
Ms Hassan says fewer than half of Australians have a stash of at least $5000 to pay for unexpected expenses.
So here’s my New Year’s resolution…..get the emergency fund on track.
How to build your rainy day savings from finder.com.au
1. Have a smart goal: When setting yourself a savings goal, be realistic – it’s not going to happen overnight. Give yourself a timeframe to keep you on track. Doing this will allow you to analyse all your outgoings and deduct this from your income to give you an idea of what you should be aiming for – and what is realistic – to save each month.
2. Set up an automatic savings plan: A separate savings account will allow you to directly debit some money from your everyday account each payday. No matter how big or small, the key thing here is that you’re saving some cash regularly and watching your emergency fund grow.
3. Reduce expenses: Work out where you can cut back. Look at all your outgoings – loans, utilities, petrol, groceries, insurance and come up with a plan to reduce them.. By doing an audit of all expenses you could save thousands which could be added to your rainy day savings.
4. Save your tax refund. As the end of the financial year approaches, consider depositing any refund into a high interest savings account. Do it every year and it can add up.
5. Sell unwanted goods. A great way to get a quick cash injection. Clean out your cupboards and sell any unused clothes, furniture and appliances. Have a garage sale or sell your belongings online. The proceeds can give your rainy day savings a much-needed boost.
Did you know….
- Men have more savings available than women, with 48% of men having over $5,000 on hand vs only 35% of women. Women are also more likely (17%) to report having less than $100 on hand in case of emergency compared to men (7%).
- Baby Boomers have the most rainy day funds available, with 49% having over $5,000 available compared to 42% for Generation X and only 27% for Gen Y.
- Gen Y are also the most likely (17%) to have under $100 on hand compared to Gen X (14%) and Baby Boomers (8%).
- Tasmanians (52%) and NSW residents (46%) are the most likely to have over $5,000 on hand.
- Three in five Victorians (62%) have over $2,000 in rainy day savings.
- South Australians are the most unprepared state, with 30% of residents reporting rainy day savings of under $500.
- Over a quarter of West Australians (27%) have less than $500 in rainy day savings
- One in five Queenslanders (21%) has less than $500 on hand to deal with an emergency.
