This is going to be different for everyone. Things like having kids or pets, owning a car or relying on contract work could increase the amount of unexpected costs you might want to be prepared for.
A good rule of thumb is to aim for a few months of your total living expenses – so you can make sure you’re able to cover most costs that come your way. Most people don’t just have that lying around, but if you create a monthly budget, you can slowly start putting it away.
You don’t need to make huge changes to your life and budget – just start small, then keep going. If you start putting aside $10 per week, you’ll have $520 by the end of the year, which is a great place to start.
You’ll probably want to keep this separate from your everyday accounts – this way, you’re not tempted to dip into it unnecessarily. Keep an eye out for high interest savings accounts that suit your savings habits, so you can get the most bang for your buck.
If you have a home loan and an offset account, you could keep your emergency savings there, so your funds are also working to reduce the interest you’ll pay on your loan. Keep in mind that you won’t earn interest on your savings, so your fund could take longer to build up.
See how to make the most of your offset account
If you do need to use your emergency fund, try to top it up again once you can. This way, you can stay prepared for life’s ups and downs.