SYDNEY (CU)_The COVID-19 pandemic, which affected the lives and livelihood of millions of people across the globe, underscored the need to save for an emergency situation. A recent study has found that Aussies need at least $12,000 in savings if something goes wrong. Yet, alarmingly, millions of them have no safety net to fall back on if they were to lose their jobs today.
According to the research, conducted by comparison website Finder, one-in-five Australians do not have any form of emergency savings, while 31 per cent of the public does not have enough saved to cover even one month of their living expenses in the case of an emergency. Those who have enough funds to cover six months of living expenses only accounts for a little more than 30 per cent.
“Despite everything that has happened over the past year, one-in-five people still don’t have any emergency savings safety net,” Kate Browne, personal finance expert at Finder, said. “That lack of emergency funds leaves people unprepared with very little to fall back on.”
She noted that it is recommended for one to have saved at least three months’ worth of living expenses for a rainy day. This means, if a household’s monthly outgoings, including rent or mortgage, amounts to $4000, they should begin by aiming to have at least $12,000 set aside. “The more you can save the better,” she added.
However, an even bigger sum of savings is recommended by Moneysmart. According to the website, managed by the Australian Securities & Investments Commission, back in 2016, the general annual living costs of an average Australian household amounted to $74,301, which means, at least $18,575 needs to be maintained in one’s three-month emergency fund.
Meanwhile, savers are also encouraged to maximise the return on their savings by seeking decent interest rates. “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,” Browne said.
