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Emergency fund vs. sinking fund: What’s the difference?

An emergency fund and sinking fund may sound kind of similar, but they are actually very different tools both aimed at improving your financial security. Let’s look at the differences.

What is an emergency fund?

Good cash management means putting funds away for a rainy day in case you’re hit by a big cost that comes out of the blue—like an illness or a car breakdown.

This is where an emergency fund comes in. It delivers a financial safety net so you don’t have to get a loan if something untoward and unexpected happens to you or your family.

How much do I need?

There’s no strict rule here, but when it comes to an emergency fund, more is better. Even if you can only save a little at first, it’s a good idea to start, and to do it regularly.

For instance, if you put $40 a week into a savings account, you’ll have over $2,000 by the end of the calendar year, which will give you something to fall back on if a crisis hits.

Experts suggest that a good general target is to have enough money in your emergency fund to cover three months of expenses at a minimum.

How to save for an emergency fund

Sticking to making regular payments is often the hardest part when it comes to building an emergency fund.

When it comes to this part of the equation, some ideas to take the sting out of it include setting up a separate savings account, automating your savings, and maximising your offset account if you have a home loan.

How is a sinking fund different?

In business the term ‘sinking fund’ has a specific technical meaning, but when used in common parlance it refers to a strategic way to save money by regularly setting some aside.

A sinking fund is completely separate from your savings account or your emergency fund, and can be used to save up for things like home repairs, a holiday, or a new car.

Simply put, while your emergency fund should be reserved for something that comes at you unexpectedly, the idea of a sinking fund is to save for a specific and planned expense.

How to create a sinking fund

There are few simple steps here. First, dedicate a savings account to hold your sinking fund in, that you won’t access for other expenses. It can help to give the account a name in line with the expense or saving goal.


Next, you need to decide how much you’re going to store in your sinking fund as a starting point. This will likely depend on your individual financial circumstances and the goal you’re aiming at with the fund, such as whether it’s for a new car or a weekend getaway.

From there, you’ll need to decide how much you’ll put away in the sinking fund on a regular basis whether that’s weekly, monthly or quarterly.

How much should I have in a sinking fund?

Unlike with an emergency fund, the amount you need in a sinking fund account depends on the estimated cost of the expense. Once you’ve accumulated that amount, you’re able to spend it for the specified expense.

Another way to organise your sinking fund to guide your saving—if you want to get a bit fancier—is to split it into categories of expenses in line with your goals. You can deposit money for recurring expenses like taxes, subscriptions and insurance premiums, one-off purchases like a new computer or car, and then large events like anniversaries or birthdays.

Remember, the bottom line is that emergency funds and sinking funds are not mutually exclusive – both mechanisms are ways to take greater control over your finances and are ways to give you more financial freedom in the long term.

How to give better feedback: using the SBI model for success

When people disappoint us, instead of addressing issues head-on, we’re often quick to create stories in our heads. We make assumptions. And left unaddressed, assumptions can lead to misinterpretations and strained relationships.

Without taking the time to have challenging conversations, we’re unlikely to move forwards. Trouble is, as humans we tend to avoid conflict and never want to offend. That’s where the SBI feedback model — otherwise known as Situation-Behavior-Impact — can help.

But first, what is SBI?

Regardless of whether it’s at work, socially, or at home, giving feedback isn’t easy. It can cause anxiety for the person delivering feedback, and defensiveness for the person on the receiving end. The SBI structure assists people to have these conversations successfully. 

SBI helps the giver of feedback to focus on specific situations, actions and behaviours rather than the person or their attributes. This means feedback is objective, and because it’s not personal: there’s less chance of offending others. 

It’s something Catherine Bowyer, executive coach and human behaviour specialist, says can help take emotional reactions out of conversations. 

‘I find many managers don’t like delivering ‘negative’ feedback because they might upset the other person,’ she said. ‘SBI allows the feedback giver to be more objective. It’s less likely for the receiver to take feedback personally because they can separate what they did from who they are.’


How does it work? 

Putting the SBI model into practice is simple and easy. It operates in three steps. Firstly, clarify the situation. To do this, be specific about the situation in which the behaviour occurred. For example, it’s better to say, ‘during our conversation yesterday…’ rather than, ‘In previous conversations…’ Being specific helps to avoid confusion. 

Then, describe the behaviour observed. It’s important to describe observable behaviour, without including opinions or judgments. For example, saying, ‘you said something incorrect,’ is more objective than ‘you weren’t acting with integrity. 

To describe behaviour without opinions, Catherine recommends being as impartial as possible. She often asks clients, ‘if you were to video record your team member doing this behaviour, what would you see them doing on the recording?’ 

‘It helps them separate who the person is (or who they think they are) from what they are doing,’ she said. 

Finally, explain the impact the person’s behaviour had. Describing the result of the behaviour helps others see the practicalities of their actions. 

How can SBI improve behaviour? 

Before we jump to conclusions about why people act the way they do, it’s important to ask why. The extended SBII model includes an additional step  — intention. Asking others about their intent helps us avoid misconceptions. Clarifying intent also means understanding the other person’s perspective. 

Begin these conversations by asking what a person hoped to achieve or why they did what they did. Understanding others perspectives is useful when giving direction for improvement and it can spark the beginning of further coaching. 

To ensure that feedback is useful, Catherine also recommends discussing both actions and consequences. She recommends stating the actions you’d like the other person to take as a result of the feedback. Then discussing the consequences that will occur if the changes aren’t implemented. 

The result 

When we clearly articulate feedback using the SBI or SBII model, we’re less likely to cause offence. And tangible, practical feedback allows others to change their behaviour. 

‘The SBI structure helps the receiver have a better understanding of their behaviours, and what they can do to improve or change them.’

Regardless of the situation, giving feedback is never easy. But without discussing issues, we’re bound to wind up misinterpreting others’ intentions. SBI offers a safe structure to speak, understand, and listen — something we can all use from time to time.

Are you a good coach? 5 techniques to get better

In sport or athletics, we never question the need for a coach. Coaching is essential for development and motivation, staying focused on the field when the stakes are high, and helping the team realise their full potential. But when it comes to the workplace, coaching is often overlooked. 

All employees—from entry-level positions right up to the CEO—can benefit from personal development. And managers at all levels can, and should, act as coaches. We’re all eternal learners, after all. 

The right guidance at work can help unlock an individual’s personal potential, which can ultimately drive better performance outcomes for the company. 

So, are you a good coach, and could you be better?

1. Be humble

We all have our weaknesses. But do we see them? A study of Australian leadership showed that 84% of frontline managers believe they’re good at gaining employee commitment. Yet only 50% of employees think their managers involve them in decision making.

Coaching isn’t just for juniors. Everyone can both benefit from coaching and act as a coach for others. Being a mentee and mentor, means offering skills and experience to others, whilst being willing to receive feedback. Good leaders have the humility to know there’s always room for improvement. 

2. Start with empathy

Empathy is a hot topic these days. That’s for good reason. Beyond employee wellbeing, empathy can impact productivity and motivation. A CCL study showed that empathy is positively related to job performance. And a Businessolver report found that 77% of employees would work longer hours for an empathetic employer. 

Empathy means coming from a place of understanding and compassion. In the workplace, coaching with empathy can take many forms. Showing a genuine interest in employee’s needs, noticing signs of overwork, and nurturing individual ambitions, are just a few. 

3. Show appreciation 

One of our most basic needs as humans is to feel valued. At work, it’s no different. A whopping 93% of employees say their productivity increases when their employer recognises their accomplishments. Yet 41% of employees say their managers don’t show enough appreciation. 

Recognising what’s already going well––rather than focusing on what isn’t––can help employees feel valued and respected. The best coaches focus on the positives alongside areas for growth. Practice appreciation by calling out wins, celebrating milestones, and noticing positive progress. 

4. Listen before you respond 

As coaches, we’re guides, not know-it-alls. Successful coaches don’t tell others what to do. Instead, they listen, understand, and offer potential solutions and strategies. 

Coaching can help unlock potential, but it shouldn’t create cookie-cutter employees. Humans are diverse and should be celebrated as such. Celebrating diversity isn’t just good for individuals, but companies too. 

Improve your listening skills by asking open-ended questions, practising deep listening, and pausing before speaking to ensure you’re offering options not instructions. 

5. Set specific goals 

Goal setting is powerful. A review of 141 research papers found goal setting had a positive effect on behaviour and a Dominican University study found that those who wrote down their goals were 20% more successful than those who didn’t. 

Coaching without goal setting is like driving in the darkn without a map. Setting specific goals––and writing them down––means tracking progress and making tangible improvements over time. Creating specific, achievable, and relevant, SMART goals, will yield better results. A win-win for everyone. 

Coaching at work can empower a workforce and improve company performance. Almost every employee can act as a coach and everyone can benefit from guidance: it’s how we improve. Utilising these techniques can help individuals succeed while bettering the bottom line. 

Why now could be the best time to sell your car

By Mark Biggart, Flare Cars

I’ve worked in the automotive industry for almost 20 years, and I’ve never experienced what’s happening in the used car market right now. I just sold my two-year-old hatchback for a $1,000 profit — that’s $1,000 *more* than what I paid for it just two years ago. A friend bought a new Mazda CX5 three years ago, drove it for 30,000 kms, and just sold it for only $4,000 less than what he paid. 

Think about this for a second. The unwritten rules for car ownership dictate that a car will dramatically depreciate in value, from the moment you pick up the keys. So there’s probably never been a better time to sell.

So, what’s happening in the used car market, and why?

Market values for popular used vehicle models are up by 30% compared to B.C. (before COVID).

Why is this happening? Well, mainly due to COVID-19. For most of 2020, new car production and sales were severely impacted by the pandemic, and as a result, fewer cars were traded in, breaking the demand and supply balance in the used market.  

Additionally, you may have heard about the global shortage of superconductor chips required for vehicle engines and electronics. This is further restricting the new car supply, and forcing people to buy used cars as an alternative option.

What does this mean for me?

While this isn’t great news for anyone in the market to buy a second-hand car, for those who own a car, whether it’s outright or financed, now could be a great time to realise its value. 

One of my clients, Cam, was recently tossing up whether to re-lease his 3-years-old Mazda CX5 with $17,000 owing, or sell it and get a new car. He did a quick research on some car trading websites and was surprised to find out that the 50,000kms vehicle was worth much more than he had imagined. He ended up selling it for $33,000, only $2000 less than the original purchase price when he first leased it, meaning he walked away with an additional $16,000 cash tax-free in his bank account. What’s better is that he gets to lease a brand new CX5 all over again – a black one because his wife got to pick the colour this time! 

Through the novated leasing program offered by Flare Cars, you could also unlock significant savings on your car and there are two ways we can help:

  • Lease a new car. You can sell or trade in your current car (arrange your own, or we can help!), release the cash and lease a new car for an exciting upgrade. New car prices have not increased in line with used ones, and we can still get you great fleet discounts through our national dealership network, plus saving 10% GST on purchase price upfront.
  • Sale and leaseback. If you’d rather keep your current car, you can do a sale and leaseback to pocket any equity or capital gain tax-free, and finance the remaining value of your car through a novated lease arrangement. This option works well whether you have existing finance on your car or own it outright.  

Additionally, both options will save you thousands in running costs, GST and income tax over the life of the lease.  

Sounds great! How do I get started?

Reach out to us for an obligation-free consultation so we can get an understanding of your current situation, and run an initial quote on the car you want to lease – whether it’s new, used or the car you already drive.

Flare Car is exclusively available to you as an employee benefit at your workplace. If you’re not sure whether this program is offered by your employer, get in touch and we can help you find out.

Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. Flare Cars strongly recommends seeking independent financial advice to take into consideration your own personal financial circumstances before entering into any lease arrangement.

Your credit rating: Why does it matter?

Credit ratings. You hear a lot about them but there’s not much out there actually explaining what a credit rating is, and what lenders use to calculate them. So, here’s the lowdown.

What is a credit rating?

Lenders use your credit rating to decide whether to approve you for credit or lend you money. In simple terms, the rating helps them understand how likely you are to pay back any money they lend to you.

That means, whether it’s a credit loan, business loan or a home loan, your credit rating is a key metric lenders analyse in the approval process. It can also affect stuff like approvals for mobile plans, power or water, and bank overdrafts.

When it comes to the rating itself, it’s usually a score from 0 to 1200 or 0 to 1000. The higher the number, the less likely lenders think you will default on the loan.  It’s worth taking the time to get your rating in decent shape as information can stay on it for years.

Where do I find my credit rating?

Credit reporting agencies, the companies that compile your credit rating, usually use a five-point scale — excellent, very good, good, average and below average — with people at the bottom of the ladder, down near zero, commonly finding it challenging to access credit.

You can get a copy of your credit report and credit score for free every 3 months by contacting a credit reporting agency like Equifax, Experian or illion.  There are also online credit score providers that will give you your credit rating, usually in a matter of minutes, in return for you letting them use your personal information for marketing purposes.

How’s my credit rating calculated?

This is what can seem so mysterious. You may think you have a pretty good history on credit, but then get a nasty shock when you get a look at your actual credit rating.

So what exactly is taken into account to work out your credit rating? According to the federal government, your credit report, which is the official document that contains your credit rating, includes personal information like your name, date of birth, address and driver’s licence number as well as info from your financial past.

Once you get past all that, then comes the important stuff. This is the information that pertains to your credit rating and includes any defaults on utility bills, loans and credit cards, your repayment history, previous credit applications, bankruptcy and debt arrangements if you have any, and previous credit report requests.

How can I boost my credit rating?

There’s no silver bullet here, but there’s certainly lots of things you can do to help bolster your credit rating. Simply put, it comes down to being on top of your finances. It’s mostly action like paying bills on time, making minimum repayments on credit cards and personal loans, and regularly checking your credit score to make sure no errors have occurred.

On the flip side, you also need to ensure you’re not doing things that will damage your rating and see you slip down the credit score ladder. On this front, it’s a good idea not to do things (if you can avoid it) like maxing out your credit card, missing loan repayments, making multiple credit applications in a short space of time, or getting court orders made against you for outstanding debts. That last one in particular is sure to hit your credit rating hard.

Remember, whether you’re just applying for a new credit card or looking to make a big life decision like buying a new home, lenders will likely examine your credit rating before approving your credit application. So take the time to get yours looking as good as possible.

Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. We recommend you consider if you need to seek professional financial advice before making any financial decisions.

Determine your financial wellbeing score with these five questions

A simple and easy way to start cultivating financial wellbeing is with a self-assessment to determine your financial wellbeing score. Not only is this a super way to review your finances, it’s also an opportunity to take stock of your financial situation and make positive changes (if needed). Given the current financial climate, now is the opportune time to undergo a financial health check. In the March 2023 quarter, all five Living Cost Indexes (LCIs) in Australia experienced rises, including Health, Housing, Food and non-alcoholic beverages, and Insurance and financial services. Medical and hospital services saw a 4.2% increase due to higher fees and private health insurance premiums. Electricity and gas prices rose by 14.3% due to higher wholesale prices, while food prices increased due to weather-related impacts and higher input costs. Put simply – it’s an expensive time to be alive, so let’s dive in and determine your financial wellbeing score.

What is financial wellbeing?

While there’s no strict definition, the term ‘financial wellbeing’ is often used to describe a state that includes being able to meet your financial obligations, having enough financial freedom to enjoy life, being in control of your money, and having solid financial security. ANZ defines strong financial wellbeing as ‘having enough money to meet your needs now and in the future.’

When looking for signs of financial wellbeing in your day-to-day life, it’s often a good thing if you can stay on top of your bills and debt, have enough money put aside for emergencies, and keep extra cash on hand so you can plan for important future expenses, like a house deposit or education expenses.

The state of financial wellbeing in Australia

While 60% of employees are content with their current compensation, “financial pressure” was found to be the most stressful factor in a survey of 1,500 Australian workers commissioned by Flare. It is not shocking, given the state of the economy right now. In particular, housing costs are cited by 77% of workers as a source of moderate to high stress1. Now is as good a time as any to prioritise your financial health, as the rising cost of housing is unlikely to ease pressure anytime soon. 

Knowing your level of financial wellbeing enables you to better understand your saving and spending behaviours, giving you a money snapshot that can be used to make adjustments.

What’s more, in addition to small tweaks to spending and saving, assessing where you’re at in terms of financial wellbeing on a regular basis can help you break bad money habits and assist you to reach your financial goals faster.

RELATED: Tax savings – how can your car help?

What questions should I ask?

When it comes to assessing where you sit in terms of financial wellbeing, one common method is to ask yourself a set of questions, and then give yourself a rating on each.

One of the most well regarded, and quickest to use, Aussie financial wellbeing surveys asks respondents to answer from 4 (completely) to 0 (not at all) on the following five questions. See how you go on the following:

Once you’ve determined your score for each, multiply the total by five, and this will give you your overall financial wellbeing score. A score of 0 to 22.5 means you’re “having trouble” on financial wellbeing, 25 to 47.5 means you’re “just coping”, 50 to 75 means you’re “getting by”, while 77.5 to 100 indicates you’re “going great”, and is the top category.

Thankfully, if you didn’t score as high as you’d like, or just want more financial peace of mind, financial wellbeing can move up or down depending on the decisions you make.

Whatever the result, you can feel positive that a financial self-assessment is the first step to better financial wellbeing and getting your personal finances headed in the right direction.


Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. We recommend you consider if you need to seek professional financial advice before making any financial decisions.

1 Flare National Employee Benefits Index, 2023.

A simple and easy way to start cultivating financial wellbeing is with a financial self-assessment. Ask yourself these 5 questions and get on the path to financial wellbeing.