Despite many Australians saving more during the height of the pandemic in 2020, a worrying number don’t have an emergency savings fund to fall back on if something goes wrong.
Alarmingly research by Finder, found 31% of Australians don’t have enough savings to cover even one 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’.
On average Baby Boomers could survive off their savings and sick leave for 18 months compared to just over 3 months for Gen Z.
Women (27%) are more than twice as likely as men (11%) to say they wouldn’t be able to sustain themselves at all.
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, one in five 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.”
But Moneysmart recommends an even bigger sum of cash in the bank.
It found the average Australian household spent $74,301 on general household living costs in 2016, which means you need around $18,575 in your three-month emergency fund.
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?
| Time | % |
|---|---|
| Less than 1 month | 12% |
| 1-2 months | 10% |
| 2-3 months | 12% |
| 3-6 months | 14% |
| 6-12 months | 11% |
| 1-2 years | 6% |
| 2-3 years | 3% |
| More than 3 years | 14% |
| I wouldn’t be able to support myself or my family | 19% |
| Source: Finder survey of 1000 Australians, May 2021 |  |
4 tips to build an emergency savings fund:
There are many situations that could require an emergency savings fund such as redundancy, an unexpectedly large medical expense, or even your pet needs an expensive surgery.
Here are some tips from Finder on how to build an emergency fund:
- Work out how much money you need to save.
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.
Try to aim for at least three months (and ideally six months') worth of living expenses saved. - Analyse your current expenses.
Take a look at your transactions for the last few months and what you're spending on living expenses versus everything else.
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. - Pick an account for your emergency savings fund. 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.
- Monitor your progress.
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.
