It seems that all around the world these days there is wild weather. We have recently had storms here in Adelaide that have done some damage and our house was not excluded from this. Now as I ring around for tradies to repair the damage I am reminded of how important it can be to budget and keep some savings for just this kind of situation.
We have a short term savings account set up where we put a little money each fortnight for emergency expenses, whether it be a vet bill, minor house repairs, getting the car fixed, etc. The key to making this work is setting the money aside, straight from your pay packet, and then having the self control to leave it untouched until you really do need it. You cannot, for example, borrow money from the account, saying you will pay it back next pay, to buy a new handbag or clothes or have a night away. Self control! If you do “borrow” from the account you may end up falling short when you really need it.
There are many ads on television at the moment by companies (such as Wallet Wizard) that promise fast, easy loans for exactly such situations. However, these loans come at a cost. They are generally higher risk loans than those from a bank and as such carry much higher interest rates. These lead to high repayments which can become unmanageable and start or continue the debt cycle.
Many banks have savings accounts that can be linked to your main account with no fees attached. This makes it easy to split up your money and to know what each account is for. For example, we have a short term savings account for the very reason I have expressed above, but we also have other savings accounts for setting aside money for school fees and holidays. You are often only required to deposit a small amount of money, e.g. $5 a month, to earn interest on the savings account and although these are only small amounts it is surprising how they build up over time. This is a great way for keeping track of your money and prioritizing how you spend it.
Take control of your money and spend it according to your priorities, not on high interest loans.
About the Author
Sally is a home organisation and budgeting expert with a passion for helping families take the stress out of everyday tasks by creating simple, efficient and cost-effective processes. Her strategies can result in more time and energy being available to spend time doing what you love. Sally is a quiet budgeting queen, home organisation specialist, wife, mother, animal-loving mathematician and so much more.
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