Saving hard or hardly saving: Millions of households have no emergency savings
Despite many Australians saving more during the height of the pandemic in 2020, a worrying number don't have an emergency savings fund, according to new research by Finder.
The nationally representative survey of 1,000 respondents found 31% of Australians don't have enough savings to cover even 1 month of living expenses.
Just 1 in 3 have enough funds to last them more than 6 months if they were to lose their jobs today, while almost 1 in 5 (19%) have no emergency savings safety net at all.
The survey shows the average person could afford to support themselves for 9 months before their cash "dries up".
Kate Browne, personal finance expert at Finder, said millions of households have no emergency savings to fall back on.
"Despite everything that has happened over the past year, 1 in 5 people still don't have any emergency savings safety net.
"That lack of emergency funds leaves people unprepared with very little to fall back on."
It's recommended you have at least 3 months worth of living expenses in an emergency fund.
If your total monthly outgoings – including rent or mortgage payments – are $4,000, you should start by aiming to have at least $12,000 set aside.
"The more you can save the better," Browne said.
She urged savers to seek out a decent interest rate to maximise the returns on their savings.
"It's a good time for consumers to think about their financial goals for the next 12 months and to make sure that their savings are working as hard as possible for them."
On average, baby boomers could survive off their savings and sick leave for 18 months compared to just over 3 months for generation Z.
Women (27%) are more than twice as likely as men (11%) to say they wouldn't be able to sustain themselves at all.
If you were ill or injured and unable to work tomorrow, how long would you be able to support yourself or your family based on your savings and sick leave?
|Less than 1 month||12%|
|More than 3 years||14%|
|I wouldn't be able to support myself or my family||19%|
|Source: Finder survey of 1,000 Australians, May 2021|
Looking to build your emergency savings fund? Visit Finder's step-by-step guide.