Establish an Emergency Savings Fund

 Our world economy is extremely volatile and we are experiencing situations never before seen. So far Australia has managed to avoid the full brunt of the outfall that is being experienced in the US and Europe. However, what we can learn from where we stand is the importance of having an emergency savings fund.

 You may feel you are just making ends meet, but what if your washing machine broke tomorrow? Maybe, however, you are doing quite well and enjoying all the extra funds that are at your discretion to use. Regardless of your situation, most financial advisers would strongly suggest to establish monthly automatic transfers into a savings account.

 Monthly Automatic Transfers

By setting up an automatic transfer each month directly out of your salary and into a savings account, you don't feel its loss every month. But you do see the gain every month! Determine an amount that you feel you could genuinely do without on a regular monthly basis, and then add another 50%. You may think that this is impossible, but you'd be surprised at how quickly you will be able to adjust to your reduced cash flow. Within a few months you won't recognise the difference, but within a few months you will notice your savings plan increasing!

 The best way to determine how much you can put into an emergency savings fund is to gauge how much you spend on unnecessary items. This could be your daily cup of coffee, your packets of cigarettes (a great incentive to give up!) or any number of extras that you buy throughout the week. A $3 cup of coffee per working day is $15 a week or $60 per month. That's $720 per year that you could save alone!

 Add the 50% rule on top of what you think you can save and make it $90 per month. That would mean $1080 per year. By the time you add up all the little extras that make up your weekly living, you'll be amazed at just how much you can actually automatically transfer per month.