Aussies planning to dump debt for financial security in 2021

ubank-new-year

Whether we’ve realised it or not, the COVID-19 pandemic has given the country a well needed financial reality check. And it looks like that feeling will be carried on in the new year. 

According to new research from UBank, Aussies are planning to prioritise financial security in 2021 over travel and unnecessary spending. 

The number one financial goal for more than half (42%) of those surveyed is saving for an emergency fund, followed by saving for retirement (27%). 

Getting debt free is another popular financial goal for 22% of respondents, while only 23% plan to save for an international holiday. 

But with 49% of people admitting that last minute costs and spending is the biggest financial hurdle, UBank Personal Finance Expert, Andre Botes says it might be best to go back to the basics to ensure financial success in 2021, from goal setting to drafting a budget. 

“By establishing your goals, you’ll have a clearer idea of why you’re creating a budget. If you know what you’re working towards, you’re more likely to follow through,” he said. 

“Writing down your goals and putting them in a visible place or changing your phone screen to an image of your dream are great ways to help visualise where you want to be in the future.”

How to successfully set up an emergency fund in 2021

Mozo found that one in three Aussies would not be able to come up with $500 in an emergency. If you’re among those looking to build an emergency fund in 2021, knowing how much you need and nailing down a savings plan is a great place to start. 

Generally an emergency fund should have at least three months worth of living expenses, like your rent, utilities, transport and groceries. 

Depending on the state you live, Mozo found that the average person should have at least $9,000 stashed away in an emergency fund.

Three easy ways to kickstart your emergency fund:

  • Open a separate savings account - While it might be easier to keep your emergency savings in the same account as your regular savings, you may find yourself tempted to spend it. Remove this temptation by opening another savings account that’s dedicated to just emergencies. 
  • Work out your monthly deposit amount - Once you’ve got an account ready to go, the next step is to decide how much you can contribute each month. Of course, the more you are able to save, the faster you’ll get to your goal. However, it’s important to find a balance between making monthly deposits and having enough for daily expenses. 
  • Set up automatic transfers - If you find yourself forgetting to top up your emergency account every now and then, set up an automatic transfer between your transaction account and emergency fund. This will take the hassle out of remembering to save and will ensure you reach your goal!

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