A 2015 paper entitled the ‘Stressed Household Finance Landscape Report,’ indicates that ‘31.8% of households in Australia are financially stressed (financial stress is defined as not being able to meet financial commitments as they fall due).’ As levels of household debt in Australia continue to rise, we pose the questions in this Blog, ‘How many weeks worth of your regular, mandatory financial commitments do you have saved in an emergency fund that provides a savings buffer in case you fall upon hard times.
Not only is having a regular savings plan a wise financial decision, having a savings buffer means that if something untoward and unexpected happens, you will be able to manage related expenses. All of us are at risk of experiencing a sudden financial shock. We might get sick, lose a job or a relationship might break down. According to Financial Counselling Australia and also supported by feedback from the banking sector, these three external events are the cause of financial hardship for many people.
Even though most of us are aware that these types of events will sometimes occur, many Australians don’t plan for them and don’t have a savings buffer to fall back on to get them through.