Over the past couple of months, people have had no other choice but to get used to the new normal necessitated by the COVID-19 pandemic. What used to be normal is not normal anymore. Although most countries had begun easing restrictions, some countries have started putting lockdown restrictions in place again due to the spike in COVID-19 cases. Australia is one of the many countries whose citizens have experienced many changes as a result of the pandemic, including in the area of finances. Australians and the rest of the world, have realized the importance of planning ahead, including having an emergency fund in place in case the unexpected happens. Keep reading to find out just how COVID-19 is changing Aussies’ money habits.
The significance of an emergency fund
An emergency fund is a specific amount of money which you set aside for those periods of uncertainty or suffering. One such period is that of the COVID-19 pandemic. Many people didn’t even know about emergency funds and their significance until the pandemic struck. It is only then that they realized that because we are living in a world where disasters can strike anytime, disaster preparedness is crucial. Many Aussies were not prepared for the financial implications that came with the pandemic.
While some found themselves in a situation where they where now receiving less income, others lost their jobs completely. This is where emergency funds would have helped significantly for a couple of months. But unfortunately, most people were not prepared for this. Having said that, this was a lesson learned for most Aussies. Most people are now prepared to set aside emergency funds in case something like this happens again in the future.
So, how does one go about building an emergency fund?
If you have a job or some source of income, the best time to start would be now. The truth is that most people are still struggling financially because of the pandemic and it could be that you are one of those people who simply cannot start setting aside the funds. If that is the case, there is no need to beat yourself up over it. As soon as you feel that you have both feet on the ground and you can afford to set aside even a little bit towards the fund, do not think twice. This is because even though people know more about this virus, there is still quite a lot we don’t know yet. We are still dealing with it and if you can set aside money in case the situation gets worse, begin to save that money now.
It is important to remember that because emergency situations do not happen every day, there is no need to go out of your way to just to set aside money; small or reasonable amounts every month will suffice. The idea is to just make sure that in case the unexpected happens, you will have somewhere to start. Over time, those seemingly small contributions will add up to a substantial amount of money.
Open an Emergency Funds Account
As soon as you make the decision that you want to save money for emergency purposes, the first thing that you will need to do is to open a savings account with your bank specifically for that purpose. Once you have opened the account you can begin to make the deposits when it suits you; you can do this on a monthly basis. Alternatively, you can search online for financial institutions that have sign-up bonus funds incentives on offer. There are banks that will deposit bonus funds into your account if you choose to open a savings account with them. This is a good option because you will have the extra money in your emergency fund savings account.
How your emergency fund can grow quickly
There are certain steps you can take to make sure that your emergency fund grows at a fast pace. This, of course, can only work if you are still receiving a steady income. If you have lost your job or the income you are receiving at the moment simply isn’t enough, then it is understandable to hold this off. The bottom line is that you need to start spending less. It might seem like it’s an impossible thing to do, but if there is anything the pandemic has taught the Aussies, it’s that they can survive on less than what they were accustomed to. It all starts with coming up with a budget.
You need to sit down and really analyze your money habits; how you have been spending money all these years, how you can save more money. The fact of the matter is that people were forced to spend less, especially at the peak of the pandemic. And, this trend can continue even after we go back to the old normal. However, there are certain expenses that never changed such as rentals. Below are 2 ways Aussies are cutting back on their spending. Of course, you don’t really need to cut back on these things if you are financially sound and you have enough extra money to put aside towards your emergency fund.
- Eating home cooked meals
Eating out is something that most Australians love to do, but it comes at a cost. And, the pandemic made people realize that although eating out is convenient and it’s something that is fun to do, you can actually do without. This does not mean that you should stop eating out completely. Since the whole point is to save money, you can simply cut the number of times you eat out and cook more. Eating more home-cooked meals will help you to save a considerable amount of money.
- Drink less alcohol
Australians have also changed their drinking habits as a result of the pandemic. Because of the strict lockdown regulations, people were forced to either not drink at all, or to drink at home. Drinking out at a bar or club can be quite expensive. So, even though the restrictions have been eased, if you really want to be able to set aside money for your emergency fund you can reduce the number of times you go to a bar and drink at home instead.
Many Aussies have changed their money habits as a result of the pandemic. COVID-19 has made people understand that there is so much they can live without. The pandemic has also made Australians understand the significance of having an emergency fund and that the economy is not as strong as they might think. Most people are now taking the necessary steps to ensure that they are better prepared should the unexpected happen.