You Need An Emergency Fund. Here’s How To Get One.

I have to be honest – I’d rather be forced to watch yet another home renovation show, on a loop, for the rest of my life than have a conversation about money. Let alone an emergency fund.

Not that I don’t like money. I do. I realise it’s a necessity. The thing is I don’t have much of it and I’m certainly over trying to make it when all I seem to do is use it. I’m pretty cynical about my financial future.

And this isn’t a problem that’s mine alone.

Why you need an emergency fund

Deloitte’s 2017 Millennial survey discovered Australian millennials are among the least optimistic when it comes to financial wellbeing. It also revealed only one in 10 millennials believe they would be financially better off than their parents. That’s pretty scary.

No matter what generation you’re part of, having an emergency fund is one of life’s fundamental requirements – but how can we make this our number-one priority when saving is so tough?

Each year it seems harder to get by as living costs continue to rise and inflation never seems to match our pay cheques. How are we able to create this fund when we struggle with the rent, university debt and the price of a large latte?

Investment manager Rachel Jones says, “Saving is a learnt behaviour and it takes discipline and sacrifice. Today it’s too easy to live beyond our means”.

It sure is. As young people we want it all: we want to travel, live for the moment and go out to eat anywhere other than McDonald’s. But money is like a nagging parent on your shoulder, making you feel guilty for not thinking about your future.

For a lot of us, saving for grown up things like houses feels so tricky that we tend to focus on the immediate future. This is something that author of Broke Millennial, Erin Lowry agrees with.

“Millennials generally do have bad money habits, however they aren’t as focussed on consumerism, which is in stark comparison to generations before,” says Erin. “It’s not so much material things that young people spend money on, rather experiences.”

One of these experiences is travel. Westpac’s 2016 Travel Finance Report shows millennials spend around $11.3 billion in overseas escapades, which is more than any other generation before. Apparently 70% save and budget up to eight months in advance for their trip. Which goes to show: we can save when we want to.

Lowry believes saving comes down to what we value in our life, not what the media or our friends tell us we should value.

“Work out your values and focus on ruthlessly prioritising and spending money there,” she says.

Oh good, I’m allowed to layby those exxy shoes then…?

Jones says it’s about getting your head in the right frame of mind.

“You can have different saving pots,” she says. “If you want a splurge fund, have it, but an emergency fund is the most vital one to grow.

“So many of us don’t take into account the future. But no one can predict sudden medical bills or being made redundant. This is something everyone needs to have in the back of their mind.”

Ok, so how do we do create this fund?

The experts say changing just a few things can make a difference. Here’s how:

Start somewhere, start small

“First make saving a priority instead of an afterthought,” says Lowry. “Even if you can only save $5 a month, do it. Do a direct debit as soon as your pay cheque comes in. It sounds like nothing but it soon adds up and it’s about building that habit early.”

Let’s be serious, are you even going to notice $5 going out of your account automatically?

Extra cash bonuses

If you are lucky enough to get yearly bonuses or even other monetary surprises (like Aunty Jean’s 50 bucks for your birthday), don’t see it as free money. Put it straight in the fund. Even putting half of it away is beneficial.

Loose change

You know all that loose shrapnel floating around in the bottom of your bag or in the car? Put it in a jar. They aren’t worthless pieces of metal once you take them to the bank at the end of the year. I was amazed at the hundreds of dollars I’d saved. Jones suggests putting it straight into a high interest account, which you use as an emergency fund.

“High interest accounts make money for you while you sleep,” she says. “You just need to deposit a certain amount each month or cycle and you will earn interest if you don’t touch it.”

Emergency fund small change

Have a clean out

Time for a declutter? Use it for uncovering hidden gems and sell them online. There are loads of sites around like eBay and Gumtree where you can sell that last-gen Playstation and the Thomas Sabo braceles you no longer wear. Use them to your advantage, and put the gains into your emergency fund.

Cash diets

Forget the 5:2 diet, a cash diet is what we all need. Lowry suggests restricting yourself to a certain amount of money, in cash per month. “Once it’s gone, it’s gone. No deviations from your diet!”

Jones’ advice? Living on what we physically have, and not relying on credit.


“Set yourself up with a budget, work out all your outgoings and stick it on the fridge so it’s in sight every day,” suggests Jones. “Having something visible and checkable really helps to keep you on track.”

Weekly habits

“If you really look at what you spend your money on every time you walk out the door, is it really worth it?” says Jones. “If you make small changes in your habits like having one less coffee each day, or taking your lunch to work instead of blowing cash at the food court, you’ll soon reap the rewards.”

There’s no denying saving is hard. But these tips show it can be done, if we prioritise and get proactive about savings. Lowry’s wish?

“I’d love for all young people to have a minimum of $1000 to $1500 saved in their emergency fund and 3 months minimum in living expenses saved. This is the goal to aim for.”

A published freelance writer from print to online, Katy’s passion is honest authentic writing. From the mundane experience to a sensational observation, Katy always finds a way to voice what she sees. Relatable and quirky, she writes with warmth and familiarity. She also loves lists, matching socks and edamame beans. You can find her on Twitter @whatktdidnextfw and Facebook.

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