How Much Should You Have in an Emergency Fund?

A good target for an emergency fund is three months of your essential expenses, according to the government's Moneysmart website. If your household spends $3,000 a month on rent, bills, groceries and transport, that's $9,000. If that feels out of reach, start with a smaller goal of $1,000: it covers many common emergencies, like a car repair or a vet bill.

Here's how to work out your number, where to keep it and how to build it up.

How to work out your emergency fund target

Add up your essential monthly costs: rent or mortgage, utilities, groceries, insurance, transport and minimum debt repayments.
Multiply by three for a solid emergency fund.
Save more if your income is less secure, for example if you're a casual worker, self-employed or the only income earner.

Source: Moneysmart, save for an emergency fund.

Example targets

Single renter, $2,400 a month in essentials: $7,200
Couple, $3,500 a month: $10,500
Family of four, $5,000 a month: $15,000

Illustrative examples only. Use your own costs.

What counts as an emergency?

An emergency fund is for costs you have to pay quickly when other money isn't available, such as:

Car repairs you need to get to work
Urgent medical, dental or vet bills
Unexpected travel, like a family emergency interstate
A broken essential appliance, like a fridge or hot water system
A drop in income, like losing shifts or a job

If a cost can wait, like a new phone or a holiday, save for it separately instead.

Where to keep your emergency fund

A separate high-interest savings account, so it's easy to reach but not mixed with your everyday money
A mortgage offset account, if you have a home loan, which also reduces your interest

Avoid keeping it in shares or term deposits that you can't access quickly without a cost.

How to build an emergency fund

Start small. $20 a week adds up to more than $1,000 in a year.
Automate it. Set up a transfer the day you're paid, or ask your employer to split your pay.
Add windfalls, like a tax refund or a bonus.
Cut one cost and redirect it, such as a subscription you rarely use.
Top it back up after you use it.

A simple method helps. See the payday countdown in our guide to the best budgeting apps.

What if an emergency hits before your fund is ready?

First check cheaper options. Many providers offer payment plans for medical, vet and utility bills, the No Interest Loan Scheme (13 64 57) lends to eligible people for essentials, and free financial counselling is available on 1800 007 007.

If you still need help covering an urgent cost, Jingle's emergency loans range from $500 to $10,000, with fixed repayments and no early repayment fees. Only borrow if the repayments fit your budget. Approval is not guaranteed.

Frequently asked questions

How much should I have in an emergency fund in Australia?

Moneysmart suggests three months of expenses as a good target. Save more if your income is irregular or you're the only earner.

Is $1,000 enough for an emergency fund?

It's a good first goal and covers many common emergencies, like a car repair or vet visit. Aim to build it up to three months of expenses over time.

Where should I keep my emergency fund?

In a separate high-interest savings account, or a mortgage offset account if you have a home loan.

Should I pay off debt or build an emergency fund first?

Many people build a small fund of around $1,000 first, then focus on high-interest debt, then grow the fund. Talk to a financial counsellor if you're unsure.