One minute, you’re cruising along, enjoying a flat white at your favourite café, and the next, your car breaks down, your washing machine calls it quits, or an unexpected medical bill lands in your lap. These moments can really take a hit on your bank balance if you don’t have a financial cushion to soften the blow.
Kiwis are no strangers to unexpected expenses. Whether it’s a sudden vet bill for the family dog, a hefty power bill during a freezing winter, or a last-minute flight to see a loved one, having a financial safety net can make all the difference. So, let’s talk about how to build one, step by step, in a way that works for the average New Zealander.
1. Start Small, Build Gradually
One of the biggest misconceptions about saving is that you need to put away large sums all at once. But the truth is, small, consistent contributions add up over time. Even setting aside $10 or $20 a week can make a big difference down the track.
A good place to start is by setting up an automatic transfer into a separate savings account. Treat it like a bill you have to pay yourself. If you never see the money in your main account, you’ll be less tempted to spend it.
2. Have a Dedicated Emergency Fund
Keep your emergency fund separate from your day-to-day money. Trust me, you don’t want to dip into it for a ‘treat yourself’ moment and regret it later! Ideally, you want to aim for at least three to six months’ worth of expenses, but don’t let that number put you off. Just focus on getting started, even if it’s just a few hundred dollars at first.
Consider using a high-interest savings account that offers flexibility and easy access. Kiwi banks like ASB, ANZ, or Kiwibank all have good options for this.
3. Cut Back on Unnecessary Spending
We all love a good takeaway feed or a cheeky night out, but if money is tight, trimming down on non-essential expenses can help grow your emergency fund faster. Instead of buying lunch every day, try bringing leftovers to work. Swap that premium streaming subscription for a cheaper option. Small changes can free up extra cash that can go straight into your safety net.
4. Consider a Side Hustle
If your regular income isn’t quite covering all bases, a side hustle can help. Thanks to technology, there are plenty of ways to earn extra cash. You could pick up some freelance gigs, drive for Uber, rent out a spare room on Airbnb, or sell handmade crafts on Trade Me. Every little bit helps when it comes to securing your financial future.
5. Avoid Relying on Credit Cards for Emergencies
While it can be tempting to reach for the credit card when faced with an unexpected expense, relying on borrowed money can lead to bigger financial stress down the track. Whack that credit card balance down as soon as you can, mate—those interest rates will sting worse than a jellyfish at Piha!
Instead, consider having a revolving credit account or an overdraft facility that comes with lower interest rates compared to a standard credit card. Just be mindful of repayment terms to avoid falling into a debt trap.
6. Get the Right Insurance Cover
Insurance might seem like an extra expense, but it can save you a fortune in the long run. Whether it’s car insurance, home and contents, or health insurance. Look, I know insurance isn’t the most exciting thing to spend money on, but trust me—future you will be patting past you on the back when you don’t have to shell out thousands for a car repair!
Compare different providers like Southern Cross, AA Insurance, or Tower to see which policy suits your needs and budget. It might take some time, but having peace of mind is worth it.
7. Plan for Seasonal and Recurring Expenses
Not all financial surprises are completely unexpected. Things like annual car registration, Christmas shopping, or school fees come around every year, yet they still catch people off guard. One way to stay ahead is by creating a sinking fund where you set aside money each month for these predictable expenses.
8. Seek Financial Advice When Needed
If you’re struggling to build a safety net or manage debt, don’t be afraid to seek help. Organisations like Sorted.org.nz and Citizens Advice Bureau offer free financial advice tailored to Kiwis. A financial advisor can also help you create a plan that suits your income and lifestyle.
Ever had a bill show up right when you thought you were finally getting ahead? Yeah, it’s the worst. But here’s the good news—you can get on top of it with a solid backup plan. By starting small, making smart choices, and preparing for the unexpected, you can build a solid financial safety net that gives you peace of mind.
Remember, it’s not about how much you save, but rather the habit of saving consistently. Your future self will thank you for it. So why not start today? Even if it’s just a few bucks, it’s a step in the right direction.
Got any other smart savings tips? Share them with us—let’s help more Kiwis get financially secure!