How to Jump Start Your Emergency Fund

Establishing and maintaining an emergency fund can help you focus on what's most important when  unforeseen life events strike. Start slow and automate your savings

Emma Rapaport 25 March, 2021 | 9:08AM

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Layoffs. Lost shifts. Mass shutdowns. The response to the global spread of Covid-19 is affecting workers across the world. When unexpected events happen, you want to be able to focus and make important decisions without having to worry about money.

If you don't have an emergency fund, now is a good time to build one. You can think of it as a safety net that helps you cover unexpected expenses.
They're not always life-or-death situations, either. Unexpectedly losing your job or needing to fund emergency travel can be much less stressful if you have cash tucked away to keep the lights on. You won't need to whip out the credit card, dip into your retirement savings or raid longer-term investments.
Regardless of your life stage or situation, emergency funds are a crucial aspect of any financial plan, says Morningstar director of personal finance Christine Benz. "We all have unexpected expenses that crop up," she says. "If you have that buffer of cash, the idea is that you won't need to resort to unattractive forms of financing those unexpected costs."

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Rapaport  is a reporter for Morningstar.com.au

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