Sydney woman Emily Barnes has $4,000 in an emergency fund, but new research shows she’s in the minority for her generation. (Source: Supplied\/Newswire) <\/p>\n
Millions of Gen Z Australians<\/a> don\u2019t have a \u201ccritical\u201d financial buffer<\/a> in place, new research has found, leaving them vulnerable to the rise of unexpected costs. An emergency fund<\/a> is money that\u2019s set aside to cover urgent or unexpected expenses, whether that\u2019s car repairs or a medical bill.<\/p>\n Emily Barnes currently has about $4,000 in her emergency fund, which she keeps in a separate high-interest bank account<\/a> from her everyday spending. But the 26-year-old Sydney worker told Yahoo Finance it wasn\u2019t something she consistently maintained, and she\u2019s had to use her credit card<\/a> to cover urgent expenses in the past.<\/p>\n “I have an AMEX [credit card], which I use for points, and I tend to just put things on that and then I’ll pay it off every fortnight, rather than having an emergency fund all the time,” she said.<\/p>\n \u201cI only really started building it up when I started my [current] job, which will be two years in April. Before that, I was on a salary, but it was a really shitty salary, so I couldn\u2019t really save much.”<\/p>\n RELATED<\/p>\n Barnes receives commissions on top of her regular salary, which she puts towards both her emergency fund and investments.<\/p>\n “It means I can put a lump sum of money away, which really helps me out with the emergency fund and then the ETFs,” she said.<\/p>\n Barnes started investing in ETFs (a basket of stocks known as exchange traded funds) earlier this year to help boost her savings further and has built up a portfolio worth $50,000.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/a><\/p>\n It comes as new research commissioned by ING found only 19 per cent, or about one in five, of Gen Z Aussies have a three-month emergency fund<\/a>.<\/p>\n The average amount stashed away for those surveyed was $16,475. But the majority of Gen Z respondents revealed they had less than $10,000 in total savings<\/a>.<\/p>\n An emergency fund<\/a> is money you save to cover urgent or unexpected expenses. It gives you a financial safety net so you don\u2019t have to borrow money or take out debt<\/a>, like a credit card, which may leave you in a worse-off position if interest payment start to accrue.<\/p>\n Mintwell financial adviser Josef Jindra said it was \u201cabsolutely critical\u201d to have an emergency fund in place and it helped create a \u201cbuffer\u201d for unexpected expenses that life can throw at you, whether that\u2019s fixing a cracked tooth, a punctured tyre or an unexpected job loss<\/a>.<\/p>\n Story continues <\/p>\n \u201cEmergency funds are critical for any person at any age, whether you’re starting out, whether you’re an 18-year-old and you’re starting your first job, or if you’re a seasoned 40- to 50-year-old,\u201d he told Yahoo Finance.<\/p>\n ING head of consumer and market insights Matt Bowen said it was important to make sure young Aussies were prepared for the unexpected.<\/p>\n \u201cWhilst emergency funds aren\u2019t popular, having some money in a high-interest savings account can help when you\u2019re in a pickle,\u201d he said.<\/p>\n It\u2019s generally recommended to have enough in your emergency fund to cover three to six months of your expenses.<\/p>\n \u201cSo whether it’s $3,000, $6,000, $9,000, whatever your expenses are for three months, that should be a rough indication of your emergency account,\u201d Jindra said.<\/p>\n With the cost of living<\/a> remaining high, it can be difficult to save anything at the moment. But even small savings can help.<\/p>\n If you put $20 into a savings account each week, for example, you would have more than $1,000 in a year, which can give you a bit of breathing room.<\/p>\n Barnes said her emergency fund would be able to comfortably tide her over for a few months if needed. Thankfully, she hasn\u2019t recently run into any emergencies where she\u2019s needed cash urgently.<\/p>\n \u201cIt\u2019s more there as a safety blanket,\u201d she said.<\/p>\n By putting in a separate bank account to her everyday spending, she\u2019s also not tempted to dip into her funds for things that aren\u2019t emergencies.<\/p>\n Jindra said it was important to build up an emergency fund and to make sure you were on top of your everyday expenses before you start investing.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n The 26-year-old said her emergency fund helped provide a ‘safety net’ should unexpected costs crop up. (Source: Supplied\/Getty) <\/p>\n
Young Aussies are being urged to keep some cash easily accessible for a rainy day. (Source: Josef Jindra\/Getty) <\/p>\n