FOUNDATIONS · STEP 3 OF 4
Build Your Emergency Fund
An emergency fund is the difference between a setback and a catastrophe.
— Dave Ramsey
Financial security starts with a buffer between you and life's surprises.
This Page Takes: 15 minutes
Why This Matters
An emergency fund is your financial insurance policy. It protects you from life's unexpected expenses without going into debt or selling investments at the wrong time.
Why $10,000 is the Australian Minimum
$10,000 isn't an arbitrary number—it's based on the reality of Australian living costs. This amount covers most common emergencies without forcing you to tap into investments or take on debt.
Car Repairs
$2,000 - $5,000
Major mechanical failure, accident repairs, or replacement tyres
Home Emergency
$1,500 - $8,000
Broken hot water system, burst pipes, storm damage, urgent repairs
Job Loss Buffer
$4,000 - $6,000
2-3 months essential expenses while finding new employment
The 3-6 Month Rule
Where to Keep Your Emergency Fund
Your emergency fund needs to be liquid (accessible quickly) but separate from everyday spending. Here are the best options for Australians.
High Interest Savings Account
RECOMMENDED
Current rates: 4.5% - 5.5% p.a. (as of 2026)
Access: Instant to 24 hours (most banks offer same-day transfer)
Government guarantee: Up to $250,000 per account holder per bank
Best HISA Setup
Mortgage Offset Account
IF YOU HAVE A MORTGAGE
Effective rate: Your mortgage rate (e.g., 6.5% p.a.)
Access: Instant (typically linked to transaction account)
Tax benefit: Offset savings are tax-free (unlike HISA interest)
Offset Math
Where NOT to Keep Emergency Funds
- Stocks or ETFs: Can drop 20-40% right when you need the money
- Crypto: Too volatile for emergency reserves
- Term deposits: Locked in—defeats the purpose of "emergency"
- Everyday transaction account: Too tempting to spend
Calculate Your Emergency Fund Target
Use this calculator to determine your target emergency fund and see how long it will take to reach it.
Calculate Your Emergency Fund Target
Include rent, utilities, groceries, transport, insurance
Amount you already have set aside
How much you can save each month
Your Target
$24,000
6 months × $4,000
Still Needed
$24,000
Remaining to reach target
Time to Target
48m
At $500/month
💪 Starting your emergency fund journey. Every dollar counts!
At $300/month
80 months
At $500/month
48 months
At $1,000/month
24 months
Foundations - Emergency Fund: Complete
- An emergency fund of 3-6 months expenses protects you from life's surprises and prevents panic decisions.
- Keep it liquid and accessible in a HISA, offset account, or split between both for optimal returns.
- Build it systematically—even $500/month gets you to $6,000 in a year.
Homework
If you lost your income tomorrow, how many months could you survive on your current savings? What would change if you had a full 6-month buffer?
Use the calculator above to determine your emergency fund target. Then set up an automatic transfer to a separate HISA (or offset account) starting next pay cycle. Even $100/fortnight is progress.
What's Next?
20 minutes