Prepare an Emergency Fund

An emergency fund is a sum of money that is available to you in times of hardship or emergency. It is a liquid fund, meaning that the money is readily available and easily accessible. It should cover around 3-6 months of living expenses for both you and any dependents you might have. These personal and living expenses should cover the necessities only, like:

  • Rent,
  • Food costs, 
  • Bills,
  • Unforeseen medical expenses,
  • Any necessary outgoings,
  • Home repairs,
  • Major car fixes,
  • Unemployment.

 If you are unable to create an emergency fund with 3-6 months available, then try and create a savings account with around $500-$1000 in it. This should cover any unexpected costs, like:

  • Vehicle repair,
  • Unexpected medical emergencies,
  • Home appliance costs.

Both of these types of fund should cover the basics only, so this does not include outgoings like clothes, dining out, drinks, etc. 

This emergency fund should be easily accessible to you and not tied to any other investments. The best emergency funds would be stored in a high-interest savings account. And remember, this should be added to frequently but only used in the case of emergencies. 

Does your Super include TPD Insurance?

If you face an unexpected accident or injury and find you cannot work again, your superannuation account could be key to ensuring that you have money to live off while dealing with your total and permanent disability. While your emergency fund would be key to living while your TPD claim is sorted, having TPD insurance with your superannuation account would ensure that if you did have a total and permanent disability, your living expenses would be covered for the rest of your working life. TPD insurance is insurance provided by your superannuation account. 

It should be worth mentioning that not all TPD policies are created equally. This is because TPD is not governed by state nor federal policies, and it is instead up to each superannuation provider to create, monitor, and implement them. For more information on how TPD policies work, please click here, We recommend that you check your TPD policy provided by your superannuation to see if it bests suits you, your lifestyle, and your circumstances. If you find that your TPD policy is lacking or unsuitable, it may be a good opportunity to consolidate your superannuation accounts and policies.

Consolidate Your Super

You might have more than one superannuation account. This is an easy thing to occur because of moving jobs and making the most of different super providers. However, having multiple super accounts isn’t in your best interest because you are paying multiple fees and having an unclear idea of your retirement situation. 

Consolidating your superannuation account is a great idea for many reasons. These include: 

  • saving money by only paying one set of fees
  • having less paperwork
  • Keeping track of your super balance more easily.

Before you make the decision to consolidate your super, have a look at the insurance policies of each super account and work out which one is the right one for you, your living situation, and your type of employment. If you would like more information on how to consolidate your super and the process involved, please click here. 

Take a look at your insurance coverage

Everyone should have insurance. No matter your financial situation, having a strong insurance policy ensures that if emergencies happen, you are protected. Your individual insurance needs will change over time, especially as you get older and get dependants as you will want to ensure that you, your family, and your home are all covered by insurance. Some emergencies are more costly than others, for example, if you have a medical emergency and need an ambulance, these fees could be extortionate if you are not properly protected.

Other insurance types that could be applicable to you include:

  • Life insurance,
  • Renters insurance,
  • Home insurance,
  • Health insurance. 

Everyone’s insurance needs will be different. This is why it is important to have a research-based approach to assessing what type of insurance you need and what policy best suits you. 

Create a budget

Having a budget will help you feel in control of your money. A budget will not only help you save money for exciting things but also keep you prepared for any bills and unexpected expenses. 

To create a budget you should:

  • Set your money goals by working out why you want a budget and where your money will eventually go.
  • See where your money goes. By having a clear idea of your regular expenses and spending habits, you can see what a realistic budget could look like.
  • Record your income. How much can you expect to receive each month? 
  • Add up your expenses. These can include fixed expenses like rent, bills, council rates, household expenses, medical costs, and transport costs. Also included would be debt expenses like personal loan repayments, credit card payments, and mortgage payments. Finally, any unexpected expenses like car repairs and medical bills. 
  • Set your spending limit. Once you have worked out your income and outgoings, set a spending limit that is realistic for you and your lifestyle. 
  • Review your budget regularly. This will not be a fixed budget for the rest of your life, but will instead depend on a variety of factors like your income, and changes in your life and lifestyle. 

While you can’t be prepared for every unexpected thing to happen in your life, there are certain measures that you can take to best ready yourself. 2020 was a completely unexpected year, and if there is one thing that we can take for it, it is to keep track and manage our finances properly.