Life always has this habit of lofting financial curveballs at Australians that can often place them in dire financial straits.

From natural disasters, to unexpected job situations, to deaths in families, there’s always something that needs to be paid with the problem being, Aussies don’t always have resources to pay it with.

And we haven’t even mentioned economic or financial crises.

However, television presenter and financial journalist, David Koch, says that putting a financial emergency contingency in place can help soften any unexpected trouble that might come your way.

Here are a few easy-to-do steps that David Koch suggests that can surprisingly make a big difference in helping your prepare for the inevitable:

Safeguard Your Biggest Assets

A lot of victims of fire, cyclones and even burglaries find themselves in deep trouble for a few reasons. They are either under insured, not at all insured or worse, they did not fully comprehend the fine print of their policy.

To make sure neither of those things happen, David Kock recommends that you take a close look at your existing policy and ensure that the house, its contents and the car is covered. Then, double check on the fine print to find out what exactly isn’t covered by your current policy.

Safeguard Your Cash Flow

If you are the primary breadwinner of your family, David Koch says that you must protect that flow. What that basically means is income protection, and life and trauma insurance.

Reports involving bankruptcy indicate illness as one of the most prevalent causes of people becoming insolvent so make sure that you’re medical insurance is sufficient enough.

Reduce Debt to a Level that is Manageable

David Koch proposes that you take care of your biggest debt such as credit cards and store financing before moving on to the rest.

Save Early on Superannuation

Retirement should be the golden years of your life. The least of your problems should be financial uncertainty. Sadly, this isn’t the case in Australia as only 20% of people get to retire during the time that they have planned to. The rest are forced to retire for one reason or another, which can lead to financial trouble because they’re ending up with much less than what they expected.

Superannuation contributions entice fantastic tax benefits so David Kock recommends taking full advantage of them. Work out an amount which would back a good retirement lifestyle and then begin chipping in as early as you can so that goal is reached ahead of when you plan to cash in.

Establish an Emergency Six-Month Salary Cache

This particular stash could be stored in a bank account but could be utilised to paid off a home loan or be withdrawn when absolutely needed. This way, the money could be accumulating interest and slashing down the term of the loan.

Few Strategies to Establish an Emergency Fund

Make use of unexpected windfalls

Should unexpected cash comes your way, make sure it goes straight into the fund.

Automatic debit on payday

Make sure to set up a fixed amount that would be automatically transferred to a separate emergency account on the day your salary reaches the bank. It becomes one of those subtle transactions that don’t even register on your radar and you live on what’s left over.

Focus on a luxury you can do without

Each household is estimated to waste at least 10% of its income every month. Identify the leaks such as subscriptions you are either underutilising or worse, not using at all, and other unnecessary things. Pull the plug on those and use that money to slowly build up your emergency fund.

Collect spare change

Empty the change from your pockets, perhaps including their $1 and $2 coins into a jar at the end of each day. This works particularly well if you use cash every day. At the end of each month, take the money in the jar and add it to your emergency fund.

Managing your finances in today’s landscape can be a tricky task. But fortunately, we have some tips that just might be of help.

Source:
https://www.dailytelegraph.com.au/moneysaverhq/kochie-looks-at-how-to-build-a-rainyday-fund/news-story/2bd993fedc2895af050b2d1965515a30

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