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- By Kerry Lee
From severe weather events to the Covid Pandemic, fuel shortages and wars, the 2020s have been a turbulent time.
As the cost of living rises as a result, Kiwis should have an emergency fund, John van Winden (NZHL Home Loans and Insurance) advises.
Being prepared for unexpected or ‘black swan’ events is just as important as saving for our future. This is especially so for people who have recently taken on a mortgage.
“Many New Zealanders would struggle to support themselves financially beyond a few months if their income stopped,” the Pukekohe-based broker says. “That’s why emergency savings should be part of a broader plan. Setting a plan helps keep partners aligned, builds practical habits, and provides clarity around priorities.”
As a rule of thumb, at least three to six months of living expenses should be calculated and set aside, van Winden suggests.
While it may be tough for many, tucking money away for emergencies is important for many other less dramatic situations too.
Although renters can rely on landlords to step up when issues occur, to some extent, homeowners must be aware of how many problems can arise and be prepared to cover the cost.
“Unexpected costs are a reality for most families. Cars need repairs, household items such as hot water cylinders fail, or income can change suddenly. Without savings, people are often forced to rely on short‑term or high‑interest debt, which only adds to financial stress.”
Such tools as DebtNav (NZHL’s online debt monitoring tool) can help us see how small steps towards building an emergency fund can help in the long run.
