46% of households have only A $5000 or less in emergency reserve funds in their villages. (photo by the Daily Telegraph)
According to the Daily Telegraph, 1 / 5 of Australians think A $1000 should be enough as an emergency fund, but experts say the amount should be higher.
It is reported that the West Pacific Bank (Westpac) conducted a survey of 2000 Australians, and found that Forty-six percent of households have an emergency reserve of A $5000 or less. 20 percent of households think it is enough to store A $1000 or less as an emergency reserve, and 14 percent think A $5000 is sufficient.
Browne (Chris Browne), managing director of Rising Tide Financial Services, a financial services firm, said how much money Australians should store as emergency reserves depends largely on individual anxiety levels, with a minimum equivalent to one month's salary and up to three months' worth of money. He also noted that the money should be held in accounts with higher interest rates, no charges or no withholding of loans. For example, a regular account or an account that is not used for daily transactions.
As for what is an emergency, for many people it is mainly unemployment, health problems or unforeseen expenses such as car repair.
Carpenter (Kathryn Carpenter), head of storage at Western Pacific Bank, said the survey found that three out of 10 people would draw on emergency standby funds before payday, underscoring the pressure on people to spend on their lives. More than half said they would use reserve funds on a whim, especially on vacation.
Carpenter suggests that budget and balance-of-payments plans are important.
In addition, 41 percent said they would use a general savings account to deposit emergency reserve funds, and 35 percent would put the money into multiple accounts. Others will deposit in a loan withholding account or a term account. However, many savings accounts have very low interest rates, ranging from 1% to 2%.
The survey found that the most successful way for people to store emergency funds is to put the money in more difficult-to-use bank accounts (32%) and to spend less on food every week (30%). And limit the use of bank account funds (28%) and so on.