Why do you need an emergency fund?
Filed under: General Budgeting, Jobs & Work, Retirement, Pensions and Kiwisaver
You often hear people saying you should put aside at least 3 months expenses as an emergency fund. So – how many people do you know who have done that?
Not Many? A few? None?
Well, we have a “situation” looming where for the second time since moving to New Zealand – we may need our emergency fund.
The first was when Hubby was “made redundant” from Unisys, after the installation of a new manager who really didn’t like him. (The feeling was mutual). Hubby really disliked the job, and morale in the company was at rock bottom, with staff leaving in droves. (Over the 15 months that he worked there, the staff levels were reported to have gone from 600 to 400).
The redundancy notice came in on the 4th December (our wedding anniversary as it happens – a nice pressie!). Hubby managed to wangle some redundancy pay – so he was the only person to get a bonus that year – but it was only another month’s salary.
It took till April to get a replacement job. This is primarily because a/ He costs a lot to employ and b/ no one cares about looking for new staff in the run up to Christmas and c/ people care even less about looking for new staff during January because the beach is calling.
So for a few months – we had to manage with no income. We still had bills to pay, had to put steaks on the Barbie, and had to pay the mortgage. Without some funds behind us – we would have been stuffed.
As it was – we got through with a sense of freedom and managed to spend quite a bit of time at the beach and Hubby didn’t have to spend all day every day looking for work.
The new job came from IBM, who hubby had worked for for 10 years in the UK. So it was a good fit, and something he really was chuffed to get. Only problem was – IBM were not taking on Permanent staff - but only willing to sign a 2 year contract, to be converted to a permanent hire once you prove yourself (the 10 years in the UK busting a gut evidently did not constitute such proof).
Well, the 2 years are up next April. After 6 months of wrangling – there is still no sign of the promised permanent contract (apparently its stuck on someone’s desk in Asia Pacific waiting for a signature – it doesn’t do to rush these things). So hubby is once again having to look for a new job just in case.
Only this time – we are in a country that like everywhere else is in financial turmoil, so we have no idea at the moment how this will affect the search for a new job. We know we have income till April, but after that – well – your guess is as good as mine.
So once again, I’m immensely grateful to have set aside funds for this. It means we can last till August if the worst happens and the new contract doesn’t appear and it all goes to hell in a hand basket. I’m spending between now and then just adjusting our spending to allow me to add more to the slush fund, so that we don’t have to panic.
Its something we have found really odd about our lives in New Zealand – this lack of longevity in the jobs. I guess after 10 years with the same employer – you don’t really think that you are going to get through 3 in 4 years. We haven’t really got used to the fact that people change jobs so rapidly, and at least in the IT sector, the companies seem to be fine with this.
So yeah – 3 months slush fund. Be different – and be one of the few to get one set up. Then if this whole new-job-needed-every-18 months is not just us – you don’t have to panic – and can spend some of your redundancy time like this:
Being made redundant - Kiwi Style
Related posts:
- Wehey! We Don’t Need to dip into our Emergency Fund after all!
- Should New Zealand have an emergency fund for Migrants?
- Why wait for redundancy
Comments
One Comment on Why do you need an emergency fund?
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Hubby on
Sat, 29th Nov 2008 8:26 pm
The whole revolving door approach to jobs is a bit of a mind set thing. If you’re used to performing a contract role, then the prospect of being at the same company for a whole 18 months may feel like eternity. for those of us more used to permanent jobs, keep moving to a different employer is a little un-nerving.
Many kiwi’s seem to move to other jobs because they don’t want to put up with the grief in their existing role – which in a sense is good. Why keep bashing your head against the same brick wall, and being an entirely unhappy person, if there is a nice padded wall down the road where you’ll be a lot happier?
We came to NZ with the view that the first job, at a low salary, got us in the country and I could always find something else if the $$ didn’t improve. No extra $$, definately other walls I could be paid to bash my head against. So I moved. Perhaps it’s time for a change again!
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