Many of us are unprepared
In Australia, many of us are not prepared for negative or emergency events.
CommBank research found:
- One in three Australians say they couldn’t come up with $500 in an emergency
- One in three Australians say they couldn’t handle a major unexpected expenses
- One in two Australians say they wouldn’t have enough to handle a temporary loss of income
How can we start to prepare?
When we don’t expect the unexpected, we don’t prepare by putting money away just in case.
Then when emergency strikes, we may be hit with a greater financial cost. We might need to borrow money, dig deep into savings we had put away for a house deposit or a holiday. It also may impact the money you have to spend from your daily budget.
But it doesn’t have to be this way. The best way to start preparing for a rainy day is by setting some money aside in a rainy day fund, which you can use for unexpected bills such as car repairs or medical expenses.
Once you’ve done that, you can work towards building up your emergency fund, which is a buffer you don’t touch unless you experience a bigger or more long-term change to your finances through loss of income because you need to care for a loved one, recover from illness or unemployment.