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One in six Aussies have less than a week’s financial buffer amid rate hike pain
New research reveals the scale of Australia's financial vulnerability, with youth and single parents among those least prepared for a sudden loss of income.
- One in six Aussies say they could cover essential expenses for less than a week if their income suddenly stopped.
- More than one in three say they have less than a month’s financial cover, rising to 51 per cent among Gen Z.
- Single parents are particularly exposed, with 33 per cent reporting less than a week’s cover, compared with 15 per cent of coupled parents with children.
Millions of Aussies could struggle to pay for groceries, housing and other essentials within weeks of losing their income, with rising living costs and yet another interest rate hike adding pressure to household budgets.
New research from AMP Bank GO found 17 per cent of Australians believe they could cover essential expenses for less than a week if their income suddenly stopped.
More than one in three (37 per cent) said they would struggle to cover those costs for a month, highlighting just how vulnerable households are to an unexpected job loss or interruption to their earnings.
The findings come a day after the Reserve Bank of Australia lifted interest rates for the fifth time this year, taking the cash rate to 4.85 per cent, its highest level since 2008.
The latest Australian Bureau of Statistics figures show annual inflation reached 4.3 per cent in September, with electricity prices rising 12.8 per cent, fuel 23.6 per cent and rents 3.6 per cent over the year.
AMP Bank Group Executive Sean O’Malley said that regular household expenses were leaving some Australians with little room to absorb an unexpected financial shock.
“Keeping up with regular bills can leave very little room for a change in circumstances,” he said. “For people who say they have less than a week’s cover, an interruption to income could quickly make it difficult to pay for essentials.”
Recent data also shows that nearly two in three people avoid checking their bank balance for fear of what they might find, The Money Edition previously reported.
Younger Aussies and single parents under pressure
The research, based on a survey of 1,012 Australians conducted in September, found financial vulnerability was particularly pronounced among younger people and single-parent households.
More than half of Gen Z respondents aged 18 to 29 said they could cover essential expenses for less than a month without income, while 21 per cent reported having less than a week’s cover.
Single parents appeared even more exposed, with one in three (33 per cent) saying they had less than a week’s financial cover. That compared with 15 per cent of coupled parents with children living at home.
Everyday bills and expenses were the biggest financial concern for 32 per cent of respondents, while 36 per cent said they thought about money daily.
AMP Deputy Chief Economist Diana Mousina said the findings showed the difficult balance the RBA faces as it tries to bring inflation under control.
“These findings show just how vulnerable some Australians are to financial shocks amid the ongoing inflationary pressure we’re currently experiencing,” she said.
“It’s why the RBA faces a difficult balancing act — recognising that rising interest rates hurt mortgage holders — but are also a vital tool in helping keep long-term inflation in check.”
How much money should you have set aside?
The findings raise a practical question for households: how long could you continue paying for essentials if your income stopped tomorrow?
AMP recommends starting by calculating the cost of essential weekly expenses, including housing, groceries, utilities, insurance and transport.
You can then compare that figure with savings or other funds readily available in an emergency.
For example, a household spending $1,000 a week on essentials would need $4,000 to cover four weeks without income.
Three months of expenses would require about $13,000.
While building that level of savings may be difficult for households already struggling with rising costs, AMP recommends starting with a smaller, achievable target.
“A first goal might be a week of essential expenses, then build towards a month or more. A small transfer each payday can help make saving a habit,” O’Malley said.
Keeping emergency savings separate from money used for regular bills can also help households avoid dipping into their financial buffer for everyday purchases.
AMP recommends reviewing the amount needed whenever major expenses change, including rent or mortgage repayments.
For households with little money left after essential costs, even a modest emergency fund can buy time to respond to a sudden loss of income or a moment of crisis.
If you are someone experiencing financial stress or struggling to pay your bills, free and confidential support is available through the National Debt Helpline on 1800 007 007 or at ndh.org.au.
Topics: Cost of Living, Interest Rates