Written and accurate as at: 6 May 2019
From a wealth accumulation perspective, before embarking on longer term strategies, plans need to be in place to meet not only your short-term cashflow requirements, but also financial emergencies.
With this in mind, a key question to consider is whether you have enough savings at hand to weather a financial emergency. A financial emergency can be:
- An unexpected large expense; for example, medical/dental emergencies or home/car repairs.
- A sudden loss of income requiring you to cover three months’ living expenses; for example, losing your job (being fired or made redundant) or losing your investment property tenant.
In this animation, we illustrate the importance of establishing an emergency buffer – a ‘rainy day fund’ to weather financial emergencies.