ADVERTORIAL
Emergency Funds Make You Happy Worried about money lately? You’re not alone. New research shows it’s time to set up an emergency fund to stop you hitting the wall in a crisis. Brenda Ward finds out why.
Financial advisers have always said it’s smart to put aside several months’ worth of earnings into an emergency fund to pay for unexpected disasters, like car repairs, or losing your job. And new research from the New Zealand Financial Services Council shows that we need emergency funds now more than ever.
How often do you worry about money? Generation Y
(37 years & below)
30.3%
It says Covid-19 has hit Kiwis’ financial resilience and wellbeing hard, especially those in Generation Y (aged 37 or below). We’re worried about money Over 40 per cent of us are now worrying about money at least weekly, says Richard Klipin, chief executive of the council. Covid-19 – and money worries caused by it – are also taking a major toll on our mental health, the FSC’s Financial Resilience Index shows. “Fifty-one per cent of us have had our mental health affected at least once or twice by money matters, a 6 per cent increase since New Zealand went into lockdown,” he says. The index showed that Generation X was most worried about job security, with one in four sometimes or always worrying about their job security. “Our hope is that this first stage of research will help drive a national conversation and build awareness of how we can collectively work to build our financial resilience and wellbeing.”
Generation X
(38 – 52 years old)
Baby Boomers (53 – 72 years old)
26.1%
14.9%
32.3%
(73 years & above)
7.8% 12.7%
20.9% 26.4%
Pre-Boomers
14.2%
11.2% 30.5%
13.8%
Daily Weekly Monthly A few times a year Rarely /Never
28.9%
14.9% 20.6% 15% 7.5%
13.1%
24%
34.8%
One proven way to prepare your finances to weather a storm like a pandemic is to set up an emergency fund of easily accessible cash.
When you see a stash of cash there, you’re reminded of your financial health. It makes you feel good.
A buffer makes you happy In fact, emergency funds can make you happy, one international study shows.
Their conclusion came from a field study run for a large national bank in Britain, which was reported by the American Psychological Association.
Its authors, Peter M. Ruberton and Sonja Lyubomirsky of the University of California, Riverside, and Joe Gladstone of the University of Cambridge, suggest that it’s because you check your savings and current accounts all the time.
The bank asked its customers about their account balances and their levels of life satisfaction. They found that those with a buffer account of readily available cash were more satisfied SPRING 2020
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JUNO 73
