Financial Recovery
19th May 2025
5minutes Quick Look
Focus – Why emergency savings matter and how to calculate the right amount for your situation
Key Takeaways:
Introduction
Life throws curveballs. Whether it’s a broken washing machine, vet bill, or sudden job loss—unexpected costs happen. That’s where an emergency fund steps in
It’s not about predicting the future but preparing for it. A solid emergency buffer gives you peace of mind and financial breathing room, so you don’t have to rely on credit cards or loans in a crisis.
Many Australians live pay to pay, with little room for surprise expenses. According to ASIC’s Money Smart, around 1 in 5 adults say they wouldn’t be able to cover a $500 emergency without borrowing or selling something.
Without a financial buffer, unexpected events can quickly spiral into long-term money problems—especially if you fall back on high-interest debt.
An emergency fund acts as self-insurance. It won’t make the emergency go away, but it will keep it from wrecking your budget.
That means rent or mortgage, groceries, bills, transport, insurance, and minimum debt payments—not holidays, streaming services, or new clothes.
Use this quick formula:
| Example | Amount |
|---|---|
| Rent | $2,000 |
| Bills & groceries | $1,200 |
| Transport & insurance | $500 |
| Minimum loan payments | $300 |
| Total essentials | $4,000/month |
| Emergency fund goal (×3–6) | $12,000 – $24,000 |
Tip: Start with a mini goal of $1,000. Then build up over time
Keep your emergency fund in a separate high-interest online savings account :
Isn’t it better to invest the money?
Not for emergencies. Investments can drop in value or take days to access. Your emergency fund needs to be stable, safe, and ready to go.
What if I have a credit card as backup ?
What if I rent and have no kids — do I still need one ?
Can I use my super for emergencies ?
Conclusion
Emergency funds are the financial safety net most people don’t think about—until they need one. Building even a small buffer puts you back in control when life doesn’t go to plan
Start small, stay consistent, and treat your emergency savings as a must-have, not a nice-to-have. You’ll thank yourself later.
Looking for financial guidance, at your pace?
We’ve partnered with Money GPS to offer access to low-cost, personalised financial advice—completely online and easy to explore.
You stay in control. We simply connect you to quality advice when you’re ready.
Need Full Scope Financial Planning?
If you think you might need a holistic roadmap that leaves nothing out, consider booking a discovery meeting with a fully licensed Financial Planner.
Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.
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