1. Have some back-up money

When there’s an emergency, it’s important to have some back-up money. Call it what you like – emergency savings, a slush fund – but it should be money that you can get easily when you need it. Aim to have a couple of months’ worth of expenses, in case you should lose your job. But a good start is just having a spare NZ$1,000, for any unexpected bills.

2. Avoid having all your money locked into KiwiSaver

KiwiSaver is great for long-term savings, but not so helpful if you need money in a hurry. KiwiSaver isn’t designed to be accessed if you’ve got an unexpected bill. You might be able to withdraw your KiwiSaver money if you’re suffering serious financial hardship, but there are tough requirements you’ll need to meet. So, it’s best to make sure your entire savings aren’t locked into KiwiSaver.

3. Learn to budget

A good tip is to write a budget, so you don’t have your whole pay allocated before it’s even arrived in your bank account. Always leave a bit extra spare in case of unexpected emergencies. If you’re unsure how to do a budget, the first step is to look at how much you’re spending. Keeping a spending diary for a few weeks is a great start. Then, look at areas where you can cut down on your spending – you might be surprised at how much is going on unnecessary things!

4. Avoid high-cost debt

It’s really hard to get ahead, or even think of having any spare money, if all your pay is going towards paying off high-cost debt, such as personal loans, hire purchase, or credit cards. Look to get rid of these as quickly as possible, so you’re not paying interest. Pay off the debts with the highest interest first. Once they’re paid off, you’ll feel a real sense of freedom! Look to put this same amount of money into an emergency savings account. If you find you’re often getting into credit card debt and struggling to pay it off, cancel your credit card and use a debit card instead.

5. Only use your emergency money for real emergencies

Most of us are guilty of this at times – dipping into our emergency savings for things that aren’t real emergencies. Urgent friends meet-ups or long weekends away don’t really count as emergencies. It’s not worth using your emergency savings on this – learn to say no. Think how long it’ll take you to replace that money, if you spend your emergency savings.

Story by Claire Connell

First published 4 September, 2018

JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate.