When you look at setting up a successful, holistic long-term investment plan, you want to make sure that you have enough emergency savings so that any unplanned, short-term expenses don’t impact on your ability to stick to your long-term investment goals. You create this safety net by setting up an emergency fund.

Most financial experts suggest that your emergency savings fund should at all times cover between three and six times your monthly income. Your emergency savings fund is used to:

• Cover your expenses if you should become temporarily unemployed, or disabled.
• Cover ad hoc expenses, for example your car needs a service and it’s a lot more expensive than you had banked on.
• Minimise the impact of unplanned big bills, for example having to pay an excess on your insurance or unplanned home maintenance and repairs.

These funds should be kept safe and easily accessible in a short-term savings product. Remember to pay back into your emergency fund after you’ve used the funds to pay for an unplanned expense.

Bank accounts, fixed deposits,fixed income and money-market unit trusts can be used to create your emergency fund.

Best advice is to work with a qualified financial planner when you are deciding how you want to save for your emergency fund.