Learn to prepare for a financial emergency because setbacks tend to be difficult to manage once it has begun.
According to a report released by the Australian Bureau of Statistics (ABS), 38% of Australians experience at least a form of household financial stress. This increased stress contributes to more individuals using up their savings and acquiring more debt to cover basic living expenses.
Ongoing financial stress can be crippling. And together with debt, it can be very difficult to get out once a spiral has begun. You can avoid potentially debilitating stress and recover faster from your setbacks by setting up plans to support yourself during times of financial difficulties.
What qualifies as a financial emergency?
The definition of a financial emergency may vary from person to person. When talking about financial emergencies, we tend to include the following:
- Unemployment without a notice
- Unexpected retirement
- An injury or a chronic illness that could affect a person’s ability to work
- Damage to a person’s home or livelihood
- Sudden ongoing costs like an increase on debt or mortgage repayments
- Shortage in cash to pay for financial commitments.
Create an emergency fund
Make sure that you have money set aside for hard times by creating an emergency fund. One of the best ways to set this up is to divide your bank account into multiple accounts. A separate account for your emergency fund is a dedicated place for you to contribute money into. This will also serve as a form of insurance.
You decide on how much you can afford to deposit. Determine if you want to do it on a weekly, fortnightly, or monthly basis. Consider a high interest account to make the most of your emergency funds.
The rule of thumb for your emergency funds is that it should be at least three months’ worth of your monthly expenses. If suddenly you lose your source of income, you are able to support yourself in between. If it’s possible, your next target is to have six months’ worth of savings in your emergency account, and so on.
Shop around for insurance
It’s better to have a plan instead of waiting for a crisis to come along. Shop around for home and contents insurance, or income insurance to serve as a fallback when a financial emergency happens.
Look for financial advice
Don’t be afraid to ask for help. If you feel that an expert’s help is needed, Moneysmart gives free financial counselling. They will be able to assist you to find a solution to problems such as:
- Struggle to pay bills
- Gas, electricity, or phone disconnection
- Car accidents without insurance
- Tax debts
- Harassment from debt collectors
- House eviction.
Seek government benefits
If everything else fails, look into government benefits as you may be entitled to one. However, building an emergency fund is a surefire option and will definitely set you up for the future.
Fund your daily expenses with the ASAG Reverse Mortgage
At ASAG, we support our customers in Australia who are in their retirement years by offering our equity release solutions to help fund their expenses. And one of these solutions is our reverse mortgage.
By utilising the ASAG Reverse Mortgage, you can access the wealth that’s built up in your home without selling. There’s also no ongoing payments involved with the loan because it is paid off when you permanently leave your home, either to downsize, move to aged care, or you pass away. The funds you’ll receive can be used for any purposes you see fit in your retirement, including your Day-to-day Expenses.
We are here to assist you with more details on how our reverse mortgage works. You can call us on 1300 002 724 or send your enquiries at email@example.com about our equity release solutions.
You may also do your own assessment by using our free tool below to determine the available equity in your home.