Work out how much you should set aside by assessing your current situation and see if you can predict any future expenses. You could start by planning to save extra for things like your car registration or car services - just in case there's an unexpected repair you might need. While a $250 repair might not break the bank, it can throw your budget out if you aren't prepared.
Then look at what you tend to spend in a month. If you were unable to work for a period of time, how much money would you need to have saved to cover those expenses?
Use our rainy day savings planner to help make a plan. Once you've worked out your expenses, the planner can calculate how much you should save based on your income and spending, and how long it could take you to save about three to six months' worth of expenses.
Work out how much to put aside, either weekly, fortnightly or monthly. Saving for three months of living costs can be a lot, so start small. Saving $10 a week is still over $500 a year. If you're not sure where to start, your first goal can be to save around $500 - $1,000. And then work towards three months' living expenses.
Pro-tip: your emergency savings should be kept separate from your regular everyday account so you don't spend it on everyday items.
Aim to save around $500 - $1,000 in your rainy day savings.
Once you start growing your savings balance, it can also act as a safety net for big emergencies like if you lost your job, or became too ill to work for a while.
A good ballpark to aim for is at least three to six months of living expenses, including bills, debt payments, and everyday spending such as groceries and transport.
Once you've set up your budget and your goals, it's a good idea to make saving automatic. Set up an automatic payment so that you don't even have to think about it, and you're less tempted to start spending it.
And if you need to dip in to your rainy day savings, that's okay, that's what it's there for. All you have to do is make a plan to top it back up again.
It's essential to build up your rainy day savings for those pesky expenses that keep popping up. But when something more significant happens, insurance could provide you that additional support. Protecting your major assets with home, contents and car insurance could help repair or replace things that otherwise would be unaffordable if damaged or lost.
More importantly, you and your ability to earn an income is one of your most valuable assets. If you can't work due to an accident, injury or illness, life and health insurance could get you and your family by, while you recover.
Not looked into insurance yet? Time to make a game plan. Start by asking yourself if you can afford to lose the item, or cover the cost of it with money you have in savings. This will make it easier to decide what's needed.
The information and tools suggested are intended to provide general information only. It is not financial advice and does not take into consideration your personal needs and financial circumstances. You should consider seeking financial advice before making any decision based on this information.
