Many Aussies would likely struggle to come up with enough money to pay a traffic fine, ambulance charge or other emergency expenses.
Research by comparison group Finder showed almost half of the Australians polled in a monthly survey had less than $1000 in their bank account.
Among those with a balance below one grand, the average balance was $210, which Finder noted would be barely enough to cover the replacement cost of a punctured tyre.
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One in five of the 3214 respondents in the Consumer Sentiment Tracker survey said they had $0 in savings.
There was a large disparity between those with little savings and the average Australian – likely due to higher income earners skewering the average figure.
Many Aussies aren’t keeping all that much in savings due to cost of living pressures.
The average Australian had $36,095 in the bank, but this disguised just how much those with higher balances actually had.
Of those who have more than $1,000 on hand, the average bank balance was $65,078.
Finder head of consumer research Graham Cooke said higher living costs were making it harder for many households to build up their savings.
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“Cost of living pressure in Australia is at a record high, which is why so many Aussies having no savings buffer is a huge concern,” he said.
“Even something as trivial as a flat tyre would be too much for many households right now … Millions are living pay to pay, with many running out of money long before they run out of month.”
Lower savings meant more Aussies were turning to credit cards.
Mr Cooke said those with lower savings balances were more at risk of incuring debt.
“Those lower levels of savings mean people are much more likely to have to turn to credit cards, loans, and buy-now-pay-later products to get by,” Mr Cooke said.
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“While these products can be great if used properly, they can quickly get out of hand if relied on for everyday expenses.”
Low savings balances also had ramifications for the housing market.
The median price of an Australian home is close to $750,000, requiring $75,000 if paying a 10 per cent deposit, along with additional stamp duty charges depending on the state.
Buying even a lower value Sydney or Melbourne house required upfront savings well over $100,000 in most instances.
Those purchasing apartments or houses in bigger capitals such as Sydney and Melbourne would need substantially more in savings to stump up the upfront costs of homeownership.
Mr Cooke said Aussies should aim to have three months of income saved as precautionary savings.
“Find what savings you can create in your everyday expenses – $50 shaved off your monthly car insurance bill could equate to an extra $600 by the end of the year.”
Households should look for ways to make their money work harder for them, Mr Cooke added.
“A high interest savings account is designed for people who want to build up their savings while earning more interest than a standard bank account,” he said.
He noted that a recurring investment of $100 a week paying 5.50 per cent interest would amount to $2,642 in two years.
