Vi­sion for the un­fore­seen

Townsville Bulletin - - NEWS -

Sophie Elsworth

HIP POCKET BLOW: Lawyer Katie Richards knows the im­por­tance of hav­ing ready sav­ings af­ter suf­fer­ing an in­jury at work. ONLY half of Aus­tralians have enough cash re­serves tucked away to cope with an un­ex­pected emer­gency that could cost them big.

And many peo­ple have failed to keep their sav­ings tar­gets on track dur­ing the past year, find­ings from lender ME have re­vealed.

The bank’s lat­est House­hold Fi­nan­cial Com­fort Re­port found only half the pop­u­la­tion has sav­ings of up to $ 10,000 to dip into in the case of an emer­gency.

Lawyer Katie Richards, 37, knows ex­actly the feel­ing of hav­ing her hip pocket hit hard. She suf­fered in­juries af­ter a fire ex­tin­guisher demon­stra­tion went wrong at her own small busi­ness work­place last year.

The in­ci­dent left her un­able to work for six months, but luck­ily she had sav­ings stashed to get by.

“I had enough sav­ings to last three months, but af­ter that point my sav­ings got com­pletely de­pleted. The busi­ness also had enough to run for three or four months,” Ms Richards said.

“I cut out any ex­penses I didn’t need and I took on a flat­mate in my apart­ment. I did what­ever I could to do to get my liv­ing costs down to neg­li­gi­ble and then I had to use credit cards, which started creep­ing up.”

ME’s head of de­posits and trans­ac­tional bank­ing, Nic Emery, said there were many ways peo­ple could dip into funds if they planned ahead. “If money is not sav­ings in a sav­ings ac­count, then your next best thing is to have paid ahead on your home loan,” he said. “But if you have to, you could turn to per­sonal loans and credit cards, but that cer­tainly wouldn’t be a rec­om­mended ap­proach.” Mr Emery said the new fi­nan­cial year was a good time to re­assess your fi­nan­cial sit­u­a­tion and get your “sav­ings mojo back”.

Ris­ing Tide Fi­nan­cial Ser­vices’ man­ag­ing di­rec­tor Chris Browne said peo­ple should ide­ally have three months of cash re­serves.

“Be­yond three months of sav­ings, every­one should have an in­come pro­tec­tion pol­icy,” he said.

“Have a wait­ing pe­riod on your pol­icy pro­por­tion­ate to your sav­ings – so if you have one month of sav­ings, have a one- month wait­ing pe­riod. This will re­duce the cost of your pol­icy.”

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