According to a new consumer survey, many Australians are financially unprepared for unexpected bills.
About two in five Australians have no savings set aside for urgent or unexpected expenses, a new Canstar survey of more than 1,000 people found.
“It is vital that Australians put some money aside in case of an emergency,” said Canstar editor-in-chief Effie Zahos.
“Even a few hundred dollars is better than nothing — when life throws you a curveball, you want to be prepared.”
Emergency savings funds are savings set aside for unforeseen costs, such as urgent mechanical repairs, vet bills, or when work shifts are shortened.
Camera icon About two in five Australians have no savings, according to Canstar. Credit provided: News Regional Media
Ms. Zahos said the average amount set aside for a rainy day was “reassuring” at $8052.
“This could be enough to cover a few months of rent or mortgage payments or nearly a year’s worth of groceries,” Ms. Zahos said.
Less than half of residents in Western Australia and South Australia have an emergency fund, while in Queensland and NSW, more than 60 percent of residents are financially prepared for unexpected costs.
Canstar has revealed their top tips for getting your savings back on track:
Save a little, a lot
A quarter of those with an emergency fund contributed to this every time they were paid.
Nearly 70 percent added it whenever they could.
“If you can’t save a large amount of money, it’s still important to try and put money aside regularly whenever possible,” Ms. Zahos said.
“Even if you save just $10 a week, you’ll get $520 a year, while $20 a week will grow to $1040 in a year, which is a decent amount you can build on.”
Canstar suggests setting up an automatic transfer every week on payday.
Round Expenses Up
Some banks offer a feature on transaction accounts that round purchases to the nearest dollar and transfers the change to a savings account.
Rounding up just $20 a month would put you at an additional $240 in emergency savings each year.
Camera IconRoundup features on savings accounts can make saving easier. Credit provided: News Limited
Add your tax return to savings.
Sending lump sum payments such as tax returns, job bonuses, or payouts directly to savings is easy to cushion emergency funds.
Shop around for a high-interest rate.
Rising interest rates are bad news for homeowners, but they are a bonus for those with savings accounts.
“If you’re not sure what your current savings account is doing, it’s time to review your rate and see how it compares,” Ms. Zahos said.
Some savings accounts go up to 3 percent for 14-35-year-olds.
“If you want to switch savings accounts, make sure you meet the conditions of the account before you disembark,” M.s Zahos warned.
Some accounts require you to meet certain criteria, such as depositing a certain monthly amount to receive a higher interest rate.
