Whether it’s a dinged car, an unexpected bill or a sudden redundancy, the unforeseen is always easier to cope with if you’ve planned for it.

This is where an emergency fund can help.

Set this financial safety net up well (along with proper insurance) and it’s likely you’ll be much better equipped to cope with any unexpected costs that arise, and less likely to have to borrow money.

To help you get started, we’ve put together some tips for building your own emergency fund from scratch.

How much should you save for your emergency fund?

This is an individual decision, but you might consider saving between three to six months of living expenses for your emergency fund.

When deciding how much you should have in your emergency fund, it’s a good idea to include all the costs you need to continue living as you are for at least three months, including:

  • Rent or mortgage repayments.
  • Food and groceries.
  • Utility bills.
  • Transport costs.
  • Medical bills.
  • A little bit of fun money for doing what you enjoy.

An easy way to work your emergency fund size can be to jump into your online banking and calculate the total amount of your transactions over the last three months. It can then be a good idea to add a little extra as a buffer to account for any out-of-the-ordinary costs that could arise.

What should the fund be used for?

It’s important to set strict rules around when and why your emergency fund can be used, so that you don’t spend it before you really need it.

Everyone’s definition of an emergency is different depending on their situation, but here are some ideas to get you started:

  • Losing your job or being unable to work.
  • Urgent car repairs.
  • Medical emergency or dental bills.
  • A family member becoming unwell or otherwise needing your help.

Generally, it’s better to keep your emergency fund out of sight and out of mind so that you’re not tempted to spend it. Opening a savings account without a debit card attached may be a good first step.

Check out Qudos Bank’s Bonus Saver Account which has rates up to 0.70% p.a.*, no account keeping fees and no minimum balance.

How can I save an emergency fund from scratch?

Building an emergency fund can be tricky, especially if money’s already tight. But making small contributions over a long period of time could be a great way to build your fund without squeezing your budget any tighter.

The following ideas can help you get started:

  • Put your fund on auto-pilot: first, figure out how much you can realistically afford to transfer to your emergency fund each month. Next, set up an automatic transfer that repeats every payday to move that amount into your designated savings account. That way, your emergency fund will continue to grow without you lifting a finger.
  • Try an offset account: an offset account is one alternative to a regular savings account that may work for you if you have a mortgage. Using this to store your emergency fund may also reduce your home loan interest repayments.
  • Use your windfalls: if you get a tax refund, a bonus at work or an inheritance, it could be a good idea to put some or all of the money into your emergency fund to give it a quick boost.
  • Start small: if you can’t spare much money to contribute to your emergency fund, don’t stress. Just contribute whatever you can manage regularly and, over time, your fund will accumulate. After all, a small emergency fund is better than no fund at all.

Planning for a better financial future

Building an emergency fund from the ground up can be hard work but it’s well worth it. Once you’ve got 3-6 months worth of living costs built up, you’ll likely be on your way to greater financial security.

Next it’s also a good idea to consider your insurance. This is your next line of defense against unexpected costs and can act similarly to emergency fund for larger expenses and events.

The insurance that is right for you will depend on your own individual circumstances and tolerance for risk.

Take a look at Qudos Bank’s insurance products to see whether there is one that is a good fit for you, and don’t hesitate to get in touch if you’d like any help.

*Earn a 0.05% pa base rate on all balances, plus if you make no withdrawals in any calendar month you'll receive an additional 0.65% pa on your savings. There is no direct access via card to your Bonus Saver. For access you need to move funds into your General Savings account.


Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305. The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.

Before opening an account with us, you should read our Terms and Conditions for Savings Accounts and Payment Services and Financial Services Guide.

Qudos Bank arranges insurance as agent for the insurer Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL No 234708. We do not provide advice on insurance based on any consideration of your objectives, financial position or need. Policy terms, conditions, limits, exclusion and underwriting criteria apply. Before making a decision please consider the relevant Product Disclosure Statement available from qudosbank.com.au. We receive commission on insurance products as a percentage of the premium paid for each policy ranging from 10 – 30%. See our FSG or ask us for more details.

Published November 2021