Millions of Australians are too strapped for cash to deal with a financial emergency, meaning a job loss or medical incident could land them in an instant crisis.
A new survey from Finder found that almost two in five respondents – equivalent to 7.9 million people – don’t have enough money saved to cover three months of essential living costs.
And one in five said they found it “very difficult” to save money.
Many Australians don’t have enough money in the bank to deal with a financial emergency. (Getty)
Nearly one in 10 don’t have a three-month savings buffer but are trying to get there, while eight per cent of respondents said they didn’t think a three-month emergency fund was necessary.
Finder money expert Alison Banney said millions of households were vulnerable to an unexpected event like job loss or illness.
“One sudden unexpected financial setback – like a redundancy or a health scare – could throw their whole life into financial chaos,” she said.
“Those without savings could be forced to rely on debt which could quickly leave them in a worse position.”
However, while 37 per cent of Australians don’t have a three-month emergency fund, the average Aussie has $43,650 in cash savings according to Finder’s Consumer Sentiment Tracker, highlighting a gap between the haves and have-nots.
Banney said even putting away a small amount consistently can add up over time and provide a crucial buffer.
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“The idea of saving three to six months worth of expenses can seem daunting to Australians who can’t even afford an unexpected $1000 emergency outlay,” she said.
“Building an emergency fund is possible. Even $20 a week adds up to more than $1000 in a year, and that’s before you include any interest earned on the cash.”
Banney also urged Aussies to set up an automatic transfer into a separate high interest savings account.
“There are great savings accounts available that pay a decent rate without making you jump through hoops. These accounts would be ideal for an emergency fund,” she said.
“With the festive season around the corner, now is a great time to trim any unnecessary spending. From cancelling subscriptions to getting cheaper health insurance cover, see where you can divert any savings into that emergency fund straight away.”