Do you really need emergency money?

Everyone is always talking about needing to have a little bit of money put aside for an emergency. But how do we do that?
And what happens when we do that if we end up spending it anyway. Do we just pack it in and not have an emergency fund or do we try and create that habit again?
I know that a lot of you probably have investments and things that are a little bit harder to get to. We’ve certainly we’ve got superannuation and we might be putting more toward our mortgage or doing those sorts of things. But what about that emergency fund? Do you need it? Did you have it? And how will it work? Because now if you’re flying around with no backup plan, it can really put you in some financial harm. It’s so important to have a little bit of money that is not terribly hard to get to, that you keep invisible, and that you can use for your backup plan when you need to.
So let’s start with flying around with no backup plan, because I think that’s what a lot of us do, and we don’t necessarily save because there’s always money coming in. So if it’s something big and we really want to aim for it, then it’s easy to save. If someone says to you need to have three months’ worth of set aside for an emergency we don’t take it seriously. Our positivity and the way that we go about life and the fact that we’re working and money’s coming in and all that sort of stuff makes that seem a little bit boring.
So how do you become a saver?
My client Sally has seven savings accounts and her trick is to make her savings invisible. They are organised into what she actually needs the money for and she splits her salary so she doesn’t miss it.
My client Fred was in some serious debt – but he also started micro saving – just to create the habit, as he was avalanching his debt.
Once he paid off his cards he added that money into his savings account – because the habit was there and he could see it grow.
One of the goals of our savings account is to watch our money grow and watching your money grow is a little bit like watching a plant grow. So go out and buy yourself a money plant, nurture it, water it, and watch it grow. It’s a consciousness metaphor, it really reminds us it takes us a moment that when we’re watering that plant in exactly the same way that we need to be caring for and nurturing the money that we’ve got somewhere.

It’s also to have it there to meet those unexpected expenses – you know, like a hot water heater or a set of new tyers, When you spend your emergency money on an emergency, don’t feel like you have failed.  That is what it’s for! 

The most important thing is to stick to the habit that gets you saving. 
Habits that you can then create can then lead to bigger and better habits when you do have a little bit more money and you’re used to putting a little bit aside.
Even if it’s small amounts it adds up having a little box where you put all your coins at the end of six months, you can take all those coins down to the bank and put them in your savings account.
Most of us don’t spend a lot of cash though, so I was trying to dream up some innovative ways to save, and I have to admit it’s hard…I did however get a bit more excited around concepts…so yes, buy from op shops…do clothes swaps with friends (I have to show you these AMAZING boots I got from a friend clearing out her wardrobe the other day). Also, I thought of the grown-up lunch box. Let’s not be boring here – a sandwich and coffee at $15 a day is $75 a week….and I have to ask is that takeaway sandwiching bringing you a high level of joy?
If not how about you grab yourself a lunch box and get creative… leftovers, little treats…anything you want because it’s just for you.
Have fun with it.
Save money!
And most of all enjoy the journey!!

Contact Phoebe

Phoebe is available for interviews, guest appearances, article commentary, and talks on a range of topics relating to property, mortgage broking, and personal finance (particularly for women!).