Finder makes money from featured partners, but editorial opinions are our own.

How to build an emergency savings fund

4 steps to creating an emergency savings fund and how much money you should aim to keep in it.

With inflation the highest it has been since 1990, 11 million Australians are saying they are having to take action to deal with rising costs.

It is already hard for many Australians to pay their bills and for necessities, so what happens if someone suddenly finds themselves without a job or faced with a large, unexpected expense? An emergency savings fund can help if you did find yourself in this situation.

Keeping some money tucked away in a savings account for emergencies is a simple way to help you manage an unplanned cost or a change in your income. It could also simply provide you a buffer if inflation continues to rise and the cost of living gets worse.

A little bit of effort now to create an emergency fund could save you a lot of stress later on.

What is an emergency fund and do I really need one?

An emergency savings fund is a savings account that you keep some money in to cover you in an emergency. It's just a regular savings account, there's no special account type called an emergency savings account.

Finder research found that 70% of Australians don't have an emergency savings fund. Plus, almost 40% of Australians could survive on their current savings for just one month or less if they lost their job tomorrow. That's not very long!

The idea behind an emergency savings account is that you have some money set aside at all times to help you pay for something unexpected. You might not think you need one right now, but sooner or later we're all faced with an unplanned cost.

Here are a few situations you could find yourself in where an emergency savings fund could help:

  • If you were made redundant from your job with little notice or had your hours reduced
  • If your pet needed some expensive surgery and you didn't have pet insurance to help you pay for it
  • If you found out your child needs braces or they need to get their wisdom teeth removed quickly
  • If you got in a car accident and were faced with a costly repair bill
  • If you had a large medical expense to pay or you need to take extended leave from your job for health reasons
  • If you needed to travel overseas with little warning and had to book some last-minute flights

If you were faced with any of the above situations and you don't think you'd be able to afford it with your current savings, you need to create an emergency fund. Even if you still don't think you'll ever need emergency savings, having some money set aside just in case is never going to hurt. You can't lose money from a savings account.

How much should I have in an emergency fund?

The more money you keep in an emergency savings fund the better. As a general rule of thumb, you should aim to keep 3 to 6 months' worth of living expenses saved up for an emergency. This is because if you find yourself unemployed, it could take several months to find a new job (or even longer). So you'll need to rely on your savings until you recover your income.

Living expenses are things like rent, mortgage repayments, ongoing bills such as health insurance, groceries and medications. They're the expenses that you can't easily cut out and things you need to get by day to day.

Finder survey: What percentage of Australians have an emergency fund?

Source: Finder survey by Pure Profile of 1112 Australians, December 2023

4 steps to building an emergency savings fund

Follow these four steps to build your emergency savings fund:

1. Work out how much money you need to save

It greatly helps to know how much money you should have in savings before you start to build your fund. Goals are easier to achieve if they're specific, so work out a figure and write it somewhere you'll see often to keep you on track.

Aim to have at least 3 months' (and ideally 6 months') worth of living expenses saved. As an example, let's say you calculated your monthly living expenses to be $1,000. You should try to build an emergency savings fund with $3,000 to $6,000 to cover you for 3 to 6 months. This means that if you have higher living expenses, you'll also need to aim for more money in your emergency savings.

2. Analyse your current expenses

Once you know how much you're aiming to save and how long you want to give yourself to save it, break this down into a monthly savings target to make it more achievable and less daunting.

Take a look at your transactions for the last few months and what you're spending on living expenses versus everything else. You can find this by logging in to your Internet banking portal and looking for the latest statement or list of transactions section. Or, the Finder app can automatically do this for you for free, so you don't need to manually sift through your bank statement. From here, you should be able to find opportunities to cut back on your spending and work out how much you can realistically save each month.

3. Pick an account for your emergency savings fund

Once you've got your monthly savings goal and you know how much money you're aiming for, it's time to put this into action. Even if you've already got a savings account, it's a good idea to open a separate savings account dedicated to emergencies. Keeping the money in a different account will help prevent you from dipping into it for things that aren't urgent.

It's not a good idea to use a term deposit as your emergency fund, as the money in a term deposit is locked for the life of the term. If you did need the money urgently with little notice, you'd need to request to break your term deposit early with the bank and you'd likely also lose any interest owed. A savings account on the other hand can be accessed instantly whenever you need it.

Build an emergency savings fund with a savings account

1 - 7 of 86
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Intro Period Government Guarantee Monthly Max Rate Conditions
Macquarie Savings Account
Macquarie Savings Account
4 months
  • N/A
MyState Bank Bonus Saver Account
MyState Bank Bonus Saver Account
  • Deposit $20
  • 5 debit card purchases
Deposit $20, 5 debit card purchases.
Rabobank High Interest Savings Account
Rabobank High Interest Savings Account
4 months
  • N/A
Bank of Queensland Future Saver Account - 14 to 35 years
Finder Award
Bank of Queensland Future Saver Account - 14 to 35 years
  • Deposit $1,000
  • 5 eligible transactions
Deposit $1,000, 5 eligible transactions.
Ubank High Interest Save Account
Ubank High Interest Save Account
  • Deposit $200
Deposit $200.
ING Savings Accelerator ($150,000 - $500,000)
ING Savings Accelerator ($150,000 - $500,000)
4 months
  • Welcome rate applies up to $500K
Welcome rate applies up to $500K.
Bank of Queensland Simple Saver Account
Bank of Queensland Simple Saver Account
  • N/A

4. Monitor your progress

If you find it hard to meet your monthly savings goal, chances are you've set this a bit too high. Similarly, if you find it really easy to meet your monthly goal and you've got plenty of money to spare on things like eating out and retail shopping, you could have set your goal a bit too low.

After one month, take a look at your progress and see if you can increase your monthly goal or if you need to relax your target a bit.

More guides on Finder

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our 1. Terms Of Service and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site