Having a savings buffer 'is critical'

Many Australians are finding that putting cash aside for a rainy day is far easier said than done.

Of course, all of us would love to have savings accounts to fall back on, but the high cost of living in Australia means that a lot of people simply do not have any spare cash to stash away.

With the price of energy, food and fuel all stubbornly high at the moment, plenty of households are discovering that their disposable income has become less and less in recent years.

New figures released by ME Bank have shown just how many Aussies are struggling to build up a savings pot.

The organisation revealed that 53 per cent of households do not have any money to spare at the end of a typical month.

Worryingly, ten per cent of this number are actually spending more than they earn and are calling on savings, loans, credit cards and in some extreme cases the equity in their homes.

Chief executive officer at the bank Jamie McPhee believes that banks have a responsibility to help people save and manage their finances better.

"A savings buffer is critical if households lose an income and unsurprisingly it is those households who have low comfort with their level of savings who also report they would struggle to manage if they lost their income," he remarked.

There are lots of savings accounts for people to choose from and it is definitely worth comparing each one to see which packages are best suited to your needs.

Those who want their money to work even harder for them should also consider term deposits, which generally offer far better savings interest rates than standard savings funds.

Banks have been keen to promote their deposits in recent months and some companies have maintained high interest rates in order to attract new customers.

It will be interesting to see how lenders act now that the Reserve Bank of Australia has sanctioned another rate cut.

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