Planning for Life’s Unexpected Moments
Life has a way of surprising us. At some point, we all face unexpected events that place pressure on our finances. That’s why having an emergency reserve is not just a recommendation—it’s an essential part of a sound financial strategy.
These unexpected events may include medical emergencies, job loss, or major home repairs. They often arise without warning and usually cost more than anticipated.
We shouldn’t overlook that sometimes ‘emergencies’ may just be to take advantage of an opportunity that means a short-term re-prioritisation of goals.
An emergency reserve acts as a financial buffer, helping you stay on track with your long-term goals. It enables you to meet urgent short-term needs without disrupting your overall wealth-building plan. It’s not just about peace of mind—it’s a key part of proactive, responsible financial planning.
How Much Should You Set Aside?
There’s no one-size-fits-all answer. Your ideal reserve amount depends on your personal circumstances—your lifestyle, health, employment situation, location, dependants, and the level of support available to you.
Some clients set aside $15,000. Others may build a reserve of $50,000 or more. A few hope to get by without one—but relying on good fortune is a risky approach. Your reserve should be shaped by your individual needs and tolerance for financial risk.
Where Should You Keep Your Emergency Funds?
The key is accessibility. You want your emergency funds available quickly, without delays or penalties. Consider the following options:
- High-Interest Savings Account: Offers immediate access and may generate some return. Ensure joint access if you share finances.
- Mortgage Offset or Redraw Facility: Can serve as a reserve while reducing home loan interest.
- Line of Credit: A pre-approved facility secured by property can work well—but requires disciplined management.
What About Insurance?
In addition to cash reserves, personal insurance can play a critical role in protecting your financial wellbeing. A well-structured insurance portfolio complements your emergency planning:
- Life Insurance: Provides financial support to your family or business in the event of your death.
- TPD Insurance: Covers loss of income if injury or illness prevents you from working permanently.
- Trauma Insurance: Offers a lump sum to manage serious health events and recovery.
- Income Protection Insurance: Replaces part of your income if you’re temporarily unable to work.
Each type of cover addresses a specific kind of financial shock. When combined with your emergency reserve, they form a strong defence against life’s disruptions.
A Practical, Caring Step Forward
Emergency reserves aren’t only for large-scale disasters—they’re for the everyday interruptions that inevitably arise. Planning ahead is an act of care: for yourself, your family, and your future.
At Continuum Financial Planners, our advisers are experienced in helping clients prepare for the unexpected. We’ll work with you to build a personalised emergency strategy that’s practical, relevant, and gives you confidence.
Wanting to make an appointment?
- Phone our office, on 07 3421 3456, or
- At your convenience, use our linked Book a Meeting facility.
(This article was first published by ContinuumFP in the September 2021 eNews. It has been refreshed/ updated recently, in May 2025.)
