Millions of Australians have little or no savings set aside to cover emergency situations such as redundancy, research shows.
The ING Direct Financial Wellbeing Index found 55 percent of all households have no assets or investments outside of the family home, which is up from 47 percent in the second quarter of this year.
It is recommended that working adults have a minimum “salary cushion” of around three months’ pay to cover such situations as being out of work.
How long would your savings last?
A separate study conducted by HSBC in the United Kingdom has revealed that many Brits’ savings wouldn’t cover an average week’s expenditure.
The number of British households with less than £250 (approximately $390) saved had risen by 750,000 to more than 8 million in the past 12 month, according to the research.
Women were found to be even less prepared than men for financial emergency with one in five admitting to having no savings at all.
“In today’s uncertain economic climate, it is important that families are setting aside a realistic sum of money to be used in emergencies,” said Bruno Genovese, head of savings at HSBC in the UK.
Solutions if you’re struggling
In the event of redundancy, more than one in 10 Brits said they would rely on a personal loan, credit card or overdraft to cover their essential outgoings.
For Australians who find themselves out of work or facing financial hardship, a number of options may be available, particularly for those with a home loan and other bills.
“An illness or job loss can create a speed bump that impacts your ability to make rent or mortgage repayments. When these events happen, you need to act quickly,” said Michelle Hutchison, spokeswoman for RateCity.
“Contact your lender as soon as you begin to struggle to make your repayments or sooner if you know you will be hit with hardship in the near future. Most lenders will work with you to ensure your repayments get back on track.”
Second, personal insurance cover is often available from your superannuation fund. For more information, or to find out how much cover you are entitled to, speak to your financial planner or contact your super fund provider directly.
Finally, create a budget and factor in some savings today. A good place to start is the federal government’s MoneySmart budgeting tool, which will help you to identify where your money goes and what you can cut back on in order to start saving.