8 · The emergency fund, and insurance
The two things that decide whether a bad month is an inconvenience or the beginning of a debt spiral.
Every household will have a year in which something goes wrong: a car, a roof, a redundancy, an illness, a funeral interstate. The event is not the variable — it is going to happen to everyone. What varies is whether the household meets it with cash or with a credit card at 20.99%.
How much, and where
The usual guidance is three to six months of committed costs — and the app gives you that number directly, because “committed costs” is simply the Bills & commitments group plus Everyday living, read from the annual view. Divide by twelve and you have one month of cover.
- Under three months of cover: the buffer is the household’s first financial job, ahead of extra mortgage repayments and ahead of investing.
- Three to six months: comfortable for a two-income household in stable work.
- Six to twelve months: appropriate for a single income, self-employment, contract work, or a household with a chronic health situation.
Keep it separate from the everyday account and boring by design. In the app, an envelope beginning Emergency funds the emergency fund on the balance sheet, which earns interest and is held apart from general savings — the flow and the stock again.
Extra repayments are hard to get back; an offset balance is not. For a household without much emergency cover, the flexibility of an offset can be worth more than the certainty of a smaller principal. This is one of the few genuinely open questions in household finance, and the app lets you test both.
Insurance: the four questions
Insurance is where households are most often either quietly over-paying or dangerously exposed, usually without knowing which. The app cannot tell you what cover suits you — that is a licensed adviser or broker — but it can do the one thing that almost never gets done: put every policy and its annual premium on one page.
| Ask | Why |
|---|---|
| What would actually happen if this income stopped for a year? | Income protection and TPD exist for exactly this, and the answer is usually unknown |
| What cover is already inside our super, and does it end at a certain age? | Cover inside super often ends without anyone being told |
| Is any of it now unnecessary? | Cover taken out for a mortgage and dependent children may no longer be needed once both are gone |
| What is the total annual premium across every policy? | List each as its own envelope. Seeing them together, at their yearly cost, is usually the first time anyone has |
Retirement is one of the few moments when insurance genuinely should be reconsidered from scratch — income protection has nothing left to protect, while some households discover they are underinsured for exactly the risks that now matter.