An emergency fund is an account with money put aside for life's unexpected expenses – like a broken washing machine or major car repairs. It gives you the breathing space to deal with these unforeseen changes without digging into your savings or having to rely on a credit card.
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This is going to be different for everyone. Things like having kids or pets, owning a car or relying on contract work could increase the amount of unexpected costs you might want to be prepared for.
A good rule of thumb is to aim for a few months of your total living expenses – so you can make sure you’re able to cover most costs that come your way. Most people don’t just have that lying around, but if you create a monthly budget, you can slowly start putting it away.
You don’t need to make huge changes to your life and budget – just start small, then keep going. If you start putting aside $10 per week, you’ll have $520 by the end of the year, which is a great place to start.
If you want to track your progress, you can create a savings goal in our Bankwest App. We’ll even show you when you’re due for a top up.
You’ll probably want to keep this separate from your everyday accounts – this way, you’re not tempted to dip into it unnecessarily. Keep an eye out for high interest savings accounts that suit your savings habits, so you can get the most bang for your buck.
If you have a home loan and an offset account, you could keep your emergency savings there, so your funds are also working to reduce the interest you’ll pay on your loan. Keep in mind that you won’t earn interest on your savings, so your fund could take longer to build up.
If you do need to use your emergency fund, don’t stress – that's what it's there for! Get back into the habit of topping it up again when you can. This way, you're prepared for life's ups and downs whenever they call.
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