II you want to stick to your retirement goal and plan, you need to be prepared for any financial setbacks. One way to do this is to build up an emergency savings fund. You should try to save at least six months of your salary at all times. Then you can use your emergency savings fund to:

• Pay for expenses if you are temporary unemployed or disabled.
• Pay for ad hoc expenses like car services or school outings.
• Lower the effect of unplanned big bills like insurance excess or home repairs.

Remember to fill up your emergency savings fund after you use any of the money.

Keep this money safe and accessible in a short-term savings account like a bank account, money-market investment or income or bond unit trust.

Money market investments are generally investments where money is borrowed for under a year. You receive an income from the interest. The most common money market investments are bank accounts or unit trust funds.

A unit trust allows investors with similar wants to pool their money together. They can then invest in income-earning fixed-interest instruments like money-market instruments, bonds or inflation-linked bonds. The total value of the pool of invested money is split into equal portions called units. As individual investors they would not have access, knowledge or time to invest in such a diversified portfolio.

Speak to a qualified financial planner to help you decide where to save your emergency fund.