9. It’s our gateway to investing. The act of building a buffer shows us how to make a surplus, which is absolutely necessary for investment, too. It’s an on-ramp.

10. It shows us how much we can achieve over time. Once we see that we’re in charge and can flow our money where we want to – and not just where the sales folks want – we’re empowered. Just seeing how our regular savings add up and compound gives us more confidence in what’s possible.

As a rule of thumb, Sorted typically recommends setting aside three months’ worth of expenses in an emergency fund. Self-employed folks or those with uneven incomes may want to put away more.

Some time ago I realised that a cash cushion is not something that anyone else can give you. (Well they can, but you may not be able to hold on to it.) My parents once pitched in a couple of thousand so I’d have something in case of emergency. Unfortunately it soon slipped through my fingers because I didn’t change any of my faulty habits with money to be able to keep it.

An emergency fund is something you need to build yourself.

And perhaps that’s the best benefit of all: achieving something worthwhile and getting ahead.

NZ Herald

Get Sorted is written by Sorted’s resident blogger, Tom Hartmann. Check out the guides and tools from Sorted – brought to you by the Commission for Financial Capabilityat sorted.org.nz.