How prepared are you for a financial emergency?

Whilst not all financial surprises are bad – if you won lotto tonight, that’d definitely be classified as a positive! But how prepared are you if a not so pleasant financial surprise happened?

The pandemic has taught us that there are times when we simply don’t know what’s going to happen next. But there are steps you can take to try to protect yourself and your family if a sudden financial emergency was to occur.

Have an emergency fund

This first one is also probably the most obvious. To prepare for a financial emergency, such as being laid off your job, having your hours at work cut, or if you’re suddenly struck down by an injury or illness – you should have an emergency savings fund at the ready to help you through this unexpected time.

While the amount you need saved up will vary depending on your individual circumstances, the general rule of thumb from financial experts is that you should have at least enough funds to cover your regular expenses for three months. If you know you’ll have additional costs such as car repayments or school fees, then you may want to increase your buffer to six or even twelve months.

Having an emergency fund is a good idea as it may provide you and your family some security if something unexpected happens.

Check your insurance policies

One thing that many people often don’t know about is that most workers will have insurance coverage attached to their superannuation funds, which you may be able to claim in the event that you suffer an injury or illness and are unable to work.

The most common types of insurance to be included with your super fund include income protection, total and permanent disability (TPD), and life insurance. The premiums for the insurance are paid from your super fund as part of your fees, but if you do make a claim, the payout will be from the insurer, it will not affect your super balance.

Insurance lump sum payments can range from a few thousand dollars to over $1 million, depending on your policy and circumstance.

Check your super member statement today or contact your super fund to see if you have this type of insurance, the amount of cover and any eligibility conditions. It may even be that you have multiple funds with multiple potential benefits. It could make a big difference to your family if something happens to you.

- Annemarie Gambera, Slater and Gordon Principal Lawyer – Superannuation and Insurance Claims.

If you’ve been injured or ill and can no longer work, you can check to see whether you may be entitled to insurance benefits through your super fund with our Free Claim Check. It only takes 3 minutes.

Seek help

Whilst getting an emergency fund together should be something we all work towards, sometimes it’s just not possible. According to Canstar’s 2020 Consumer Pulse Report 28% of Australian adults are battling debt that’s not related to housing. The same study also notes that 21% of Australians don’t have any savings, with the main reason being that they are living from pay check to pay check.

If you’ve had a sudden change to your financial situation or are experiencing financial hardship, there are services available to assist, including the National Debt Helpline , who can provide financial counselling services and free advice, including ways to manage your credit card debt, and how to negotiate payment terms with creditors to help you get back on track.