select
|

Be prepared for the unexpected

Owning a home is a long-term commitment that can span a lifetime. While we all hope for the best, it is likely that at some stage during our lives, a home emergency of some kind will strike, so it is best to be prepared.

“Being prepared for the unexpected is part of owning property,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “While it may be impossible to determine when it will happen, the eventually of something needing to be repaired on a home is a certainty that homeowners need to consider and  prepare for. Putting aside money each month in some kind of contingency fund will provide homeowners with a financial cushion and assist them in avoiding going into debt when a crisis strikes.”
 
He adds that on average the typical buyer of a single-family home will remain in the property for around 13 years – often longer. “I think it is fair to say that a lot can happen over a decade or longer.  Having a plan of action in place will help homeowners to tackle whatever life throws at them and keep going. The goal is to have the means to address the changes or emergencies that occur, without it jeopardising the homeownership or placing the homeowner under severe financial pressure,” says Goslett.
 
According to Goslett, there are emergencies that happen to the house itself, such as roof repairs or rising damp, both of which can be a massive financial expense, and there are the financial emergencies that affect the homeowner, such as job loss. “The question every homeowner should ask is if something like this happens, would I still be in a position to afford the home? For the majority of homeowners, the answer would probably be no, which is why a contingency fund is imperative as a homeowner,” advises Goslett. “While the idea of putting money aside can be a daunting task, especially with the constantly rising cost of living, the consequences of not having a financial cushion to fall back on will be far greater.”
 
Goslett says that in essence there are three basic steps that homeowners need to take to start creating an emergency fund. This will provide them with a safety net that will assist with any obstacles that come their way, regardless if it is something as big as losing their job or as trivial as a leaking toilet.
 
One – Determine the required amount

 
As bare minimum homeowners should aim to save approximately one month’s salary, however, in an ideal situation, six months’ income in saving is preferable. “A six-month financial cushion should see homeowners through most crises that arise. That said, saving up half a year’s worth of income will be no mean feat, it will take a fair amount of time and planning to achieve. Setting smaller goals along the way will ensure that homeowners maintain focus and stay motivated,” says Goslett.
 
Two – Choose a saving vehicle

When wanting to build up a significant amount of savings, selecting the right savings account is crucial for success. Interest rate yields will vary from one account to the next, so it might require some research to find the right product that will yield the greatest return while meeting the criteria. Often the savings accounts with the highest interest rates will require the account holder to lock their money away for a certain fixed period - this could be problematic to a homeowner who requires the money in an emergency.  The interest rate, as well as accessibility,  will be key factors to consider.
 
Three – Automate the savings


Setting up a monthly automatic transfer will make the process far easier and will help homeowners remain disciplined with savings. If predetermined amount of money is transferred into a savings account automatically each month, it takes the decision-making process out of the equation and ensures that a contribution is made towards the contingency fund regularly with very little effort on the homeowner’s part. 
 
“Setting money aside each month is the best way for homeowners to prepare for and deal with an emergency situation without being forced into debt. A contingency fund will help homeowners be ready for the unexpected while building a solid foundation for their financial security and independence,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK