Only one in three Australians could raise $3000 in a financial emergency

Cash-strapped Australians are leaving themselves in a vulnerable position by having no cash savings to fall back on if an emergency arises.

Two in three Australians could not easily raise $3000 within a week for an emergency, alarming new figures show.

A weakening jobs market, low wage growth, falls to the value of homes and the rising cost of living are among the biggest factors putting added pressure on our hip pockets, the latest biannual ME Household Financial Comfort report, released today, has found.

Only 35 per cent of households said they would have no worries getting access to $3000, whether it be in cash savings or by pulling money from their mortgage redraw accounts if they had one. That number has fallen from 38 per cent 12 months ago.

The survey also found about one in four households had less than $1000 in cash savings.

Australians are under increased financial strain and many do not have any money in the case of an emergency.

The report’s author Jeff Oughton said “their greatest worry was the lack of ability to cope with a financial emergency”.

“Fifty per cent of Australians have less than $10,000 in cash savings,” he said.

“Low income Australians don’t have a cash buffer to deal with a financial emergency and they are struggling to make ends meet.”

Thirty per cent of people would have to turn to selling an important possession to get money fast or said they simply could not raise the money.

The report found the biggest concerns for households included being able to make ends meet (32 per cent), levels of personal and household debt (21 per cent) and their amount of savings and available cash (19 per cent).

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Only 35 per cent of households said they would have no worries getting access to $3000.

Crown Money Management chief executive officer Scott Parry warned “everyone thinks they are going to be richer and fitter in the future”.

“Something is going to happen with the air conditioner or the fridge and people think they’ll just use their credit card as a back up,” he said.

“We suggest three months of living expenses is the goal, and the secret to that is setting up a totally separate account.”

The financial comfort report found the proportion of households contributing more than 30 per cent of their disposable income towards rent or paying a mortgage climbed from 47 to 52 per cent in the first half of this year.

Of renters, 61 per cent contribute more than 30 per cent of income towards rent, putting them under immense financial stress.

In contrast, the number of mortgage customers contributing more than 30 per cent of income towards their repayments was relatively stable at 43 per cent.

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