Want Financial Security And Stability? Emergency Funds Are Vital

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Having an emergency fund to fall back on in case of a financial disaster is much easier said than done for the vast majority of people. Although many have admitted to considering it, once their paycheck comes through, they have many duties higher on their list of importance that need paying off.

However, one Australian financial advisor has given clear and important reasons why an emergency fund should always be at the top of your priorities.

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Canna Campbell explains how to create this fund and how it differs from your other savings accounts. She said “Your emergency fund should be treated differently to your current account and savings.”

Campbell went on to explain that the money put into this account should be decided according to how much you are paid in your job and if you were to lose it, the money you would need to keep yourself out of the minus.

In addition, people need to consider situations where they might have housing damage or a medical emergency arising, resulting them in requiring immediate assistance that insurance will not cover.

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For this reason, Campbell added that There is no “‘one size fits all,’ Everyone is different.” She insisted that it “boils down to your situation, lifestyle, responsibilities and what helps you sleep well at night.”

For instance, she explained that “A young, healthy person still living at home with no debt would probably require less than a young family with three children, a mortgage, big weekly living expenses and elderly parents.”

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As for how to do it, Canna gave instruction to,”Work out how you can start allocating money aside in a separate account, and build this separate savings account as quickly as possible, without jeapordizing your living expenses.”

She finally added, “So keep it simple. However, it can be worth temporarily going without a few luxuries in order to find the extra cash flow to put into your emergency fund account. Going without a few items in the short term definitely outweighs the stress as it gives you peace of mind knowing that you have a safety net to protect you.”

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