The fallout from coronavirus has placed many Aussies under financial strain, with new Mozo research revealing 3 in 4 households are ill-prepared to handle unexpected expenses.
According to Mozo's recent survey with 1,233 Australians, only 25% have the savings to stay afloat when faced with unforeseen circumstances.*
Meanwhile, 1 in 5 respondents admitted they turned to lines of credit to support themselves through difficult times.
This isn’t surprising, given that half of all working households surveyed had less than $7,000 in their bank, while 1 in 10 had as little as under $90.
“Unforeseen expenses are never a welcome surprise, and for many Australian families, the spread of Covid19 is the most disruptive financial event that they’ve ever experienced - with hundreds of thousands likely to be out of work in the next few months,” Mozo’s Director, Kirsty Lamont said.
“Households that are lucky enough to have $7K in savings would only be able to last 4.4 weeks if they lost their income.”
The average Australian is hit with a whopping $1,900 in surprise costs each year. Yet separate Mozo research found half of the nation is stashing away less than $200 a month, with 40% unable to put any part of their paycheck towards savings.**
“The image of hundreds of people queued outside welfare offices across the country is a reflection of just how hard many Australians are doing it,” Lamont said.
How long can my savings cover expenses?
No savings account balance is the same, so Mozo crunched the numbers to reveal how many weeks of expenses your cash stash may cover you for:
|Amount in savings||Length of time able to cover weekly household expenses|
How to plan for unexpected expenses
Lamont said when it comes to creating a financial lifeline for yourself, the key is to have a solid emergency savings fund.
“Covid19 has proven that it’s impossible to predict what’s around the corner, so having a financial safety net is crucial to help you weather unforeseen events and unexpected financial hits,” she said.
“Being stuck at home means our spending options are limited, so use this as an opportunity as a time to build a buffer. Aim to save at least 20% of your take home pay over the next few months.”
Here are a few tips to spruce up your savings while in self-isolation:
- Be creative with how you earn money: Make the most of your time holed up at home by exploring ways to monetise your skills. For instance, you could bring in a few extra dollars with a new side hustle, whether that’s doing online surveys or picking up freelance work.
- Trim the fat off your expenses: From cancelling that gym membership to pulling the reins in on online shopping, there are many ways you can reduce your expenses and redirect them towards a savings goal. Give your budget a health check up to see which areas you can cut down on.
- Let apps do the heavy lifting: Download apps like Pocketbook, Spendee and MoneyTree which can track and categorise your spending. That way, you can identify any unnecessary purchases and turn them into savings instead!
- Take advantage of set-and-forget features: Some banks like ING, Bank Australia and Up offer a nifty round-up feature that automatically rounds up any purchases made on your debit card to the nearest $1 and $5, before transferring the difference into your savings account. Talk about an effortless way to save! You can also set up direct debit to transfer your monthly pay straight from your everyday transaction account to your high interest savings account.
For more information, check out our essential guide to build an emergency savings fund.
Or if you’re ready to stash away cash for unforeseen circumstances like the coronavirus, hop on over to our high interest savings account comparison table or check out some options below.
Savings accounts 2020 - last updated December 05, 2020
- MyState BankMyState Bank
Bonus Saver Account
- Heritage BankHeritage Bank
- Bank of QueenslandBank of Queensland
Fast Track Saver Account
* Notes on research - Survey findings are from a nationally representative survey of 1,233 Australians conducted from 21 January to 3 February, 2020. Australians were asked how they fared financially in the face of unforeseen financial challenges.
** Survey findings are from a nationally representative survey of 1,036 Australians conducted from 1-3 October, 2019. Australians were asked how much they saved per month as well as the top three items they’d skimp on if they were not going to make it to payday.
^See information about the Mozo Experts Choice Savings Accounts Awards
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