A financial advisor explains why you need three months of mortgage and living expenses set aside as an emergency buffer. It protects you from unexpected costs without forcing you to use credit.
Okay. The very first priority we need to get set for you is helping you build a buffer, helping you build an emergency safety net in your mortgage. So your income is going to your home loan now, which is working for you and paying down your debt, which is great. Checkpoint we need to build three months worth of living expenses and loan repayments as a safety net buffer. Once you've built this buffer, we then move to the second checkpoint. But let's just focus on one at a time. So we've settled the mortgage, everything's going well. We've got to build the buffer to three months worth of living expenses and loan repayments. So think of what your weekly redraw is, times that by 12. And then take into account your monthly mortgage repayments. So once you've got three months worth of living expenses and loan repayments up your sleeve, you're invincible financially. No matter what happens, you can conquer it. You don't have to grab a credit card to get the financial emergency covered. You have everything at your fingertips. And that subconscious peace of mind it's going to give you, knowing that no matter what happens, you've got it covered is phenomenal. It could be a, an international flight within 24 hours notice because of a relative that you need to go see who may be sick. It could be to see one of your parents interstate. The bottom line is focus on building your buffer up. So you've got at least three months worth of living expenses and loan repayments there. And as a result, you just build on that each and every month. But that is the very first checkpoint we need to get you to as quick as we possibly can, because that's going to give you a huge amount of security and a huge amount of peace of mind.
