Emergency Fund Calculator — Australia 2026
How large an emergency fund needs to be, what it earns sitting in a savings account, what it gives up by not being invested, and how long it takes to build at your current rate.
The target is monthly essential expenses times the months you want covered — essential meaning rent or mortgage, food, utilities, insurance and minimum debt repayments, not what you actually spend.
| Savings return (5%) | $600.00 |
|---|---|
| Opp. cost (3.0%) | $360.00 |
How the emergency fund works
The target is monthly essential expenses times the months you want covered — essential meaning rent or mortgage, food, utilities, insurance and minimum debt repayments, not what you actually spend. Three months is the usual floor and six is the usual answer; the honest input is how long it would take YOU to replace your income, which is why the risk setting suggests three months for secure salaried work, six for most people and nine for commission, contract or single-income households. The opportunity cost is the part people argue about: money held at a savings rate rather than invested gives up the difference every year, and at a 3-point gap on a 12,000 fund that is 360 a year for the ability to not sell anything in a bad month. That is the price of the insurance, and seeing it as a number is the point — it is usually smaller than the fear of the gap suggests and larger than people expect. Keep the fund somewhere it earns interest and can be reached the same day; a term deposit that locks the money is not an emergency fund, and neither is a credit card.
Formula: target = monthly essential expenses × months · opportunity cost = target × (investment return − savings rate) · months to build = remaining ÷ monthly contribution
Where these figures come from
Savings and interest figures on this page are drawn from the Reserve Bank of Australia (cash rate and published deposit averages), APRA (the deposit-taker regulator), and ASIC MoneySmart (consumer guidance).
- RBA cash rate — RBA — Cash Rate.
- Deposit interest-rate data — RBA — Retail Deposit and Investment Rates (F4).
- Financial Claims Scheme (deposit guarantee up to $250k) — APRA — Financial Claims Scheme.
- Compound interest & savings strategy — ASIC MoneySmart — Saving.
- Inflation & CPI — ABS — Consumer Price Index.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
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3-month fund, $4,000/mo expenses $12,000 target · ~$240/yr opp cost
Three months of $4,000 expenses = $12,000 emergency fund target. At 5% HISA rate that earns $600/yr. If invested at 8%, the same $12,000 would earn ~$960/yr — an opportunity cost of ~$360/yr to hold as cash. This is the price of financial security.
| Emergency fund target | $12,000 (3 months) |
|---|---|
| HISA return (5%) | $600/yr |
| Investment return (8%) | $960/yr |
| Annual opportunity cost | ~$360/yr |
| Monthly opportunity cost | ~$30/mo |
| Verdict | $30/mo for peace of mind — worth it |
- Time to build at $1,000/mo savings ~12 months
- Best HISA (early 2025) ING Savings Maximiser 5.50% pa
- If no emergency fund May sell investments at a loss
- High HISA rate benefit Reduces opportunity cost significantly
- Review fund size annually Adjust if expenses change
6-month fund, $6,000/mo expenses (single income) $36,000 target · ~$1,080/yr opp cost
Six months of $6,000 expenses = $36,000 emergency fund. Recommended for single-income households or self-employed. HISA at 5% earns $1,800/yr. Opportunity cost vs 8% investment: ~$1,080/yr.
| Emergency fund target | $36,000 (6 months) |
|---|---|
| HISA return (5%) | $1,800/yr |
| Investment return (8%) | $2,880/yr |
| Annual opportunity cost | ~$1,080/yr |
| Monthly opportunity cost | ~$90/mo |
| Who needs 6 months | Single income, variable pay, self-employed |
- Self-employed: consider 9–12 months Income can stop suddenly
- Offset account as emergency fund? Saves mortgage interest — effective 6%+ return
- Time to build at $1,500/mo ~24 months
- Split strategy 3 months liquid HISA + 3 months in offset
- Annual review Rebuild after any drawdown
Best Australian HISA rates 2025 5.00%–5.75% p.a. (conditions apply)
High-interest savings accounts are the recommended home for emergency funds in Australia. Top rates in early 2025 range from 5.00% to 5.75% p.a., typically requiring conditions such as minimum monthly deposit or no withdrawals.
| ING Savings Maximiser | 5.50% (deposit $1,000+/mo, grow balance) |
|---|---|
| Ubank Save Account | 5.50% (deposit $500+/mo) |
| Macquarie Savings Account | 5.35% (no conditions) |
| Suncorp Growth Saver | 5.25% (deposit $200+/mo) |
| CBA GoalSaver | 5.00% (conditions apply) |
| Term deposits (12 months) | ~5.00%–5.30% (illiquid) |
- Conditions often matter Always check monthly requirements
- Bonus rate traps Miss condition = base rate (often 0.5%)
- Emergency fund: no-condition HISA Macquarie, AMP — accessible always
- Tax on interest Counted as income at marginal rate
- Comparison site Canstar, RateCity, InfoChoice
Opportunity cost of holding cash — is it worth it? Yes — the insurance premium is small
The opportunity cost of an emergency fund is the difference between what the cash earns in a HISA versus what it would earn if invested. At 5% HISA and 8% investment return, the cost is 3% per year. On $20,000, that is $600/yr — the annual price of financial security.
| Opportunity cost rate | Investment return minus HISA rate |
|---|---|
| At 8% invest / 5% HISA | 3% or $600/yr on $20,000 |
| Without emergency fund risk | Forced to sell investments at a loss |
| 2020 crash example | ASX fell 36% in Feb–Mar 2020 |
| If forced to sell at -36% | $20,000 loss becomes $7,200 cost |
| Annual opp cost vs crash loss | $600/yr vs potential $7,200 loss |
- Reduce cost with offset account Emergency fund reduces mortgage interest
- High HISA reduces cost further At 5.5%, cost drops to 2.5%/yr
- Self-insure calculation Cost per yr vs probability of needing it
- Liquid investments (ETFs) Some use ETFs as emergency fund — risky
- Best strategy Full emergency fund, then invest surplus
Worked examples
| Inputs | Fund Target | Note |
|---|---|---|
| 4,000 a month of essentials, three months covered | $12,000 | a 12,000 target earning 600 a year |
| Six months instead of three | $24,000 | the usual answer for most people — and double the opportunity cost |
| Half built, saving 500 a month | $12,000 | twelve months to finish it |
The sources behind this calculator
- CFA Institute — Quantitative Methods: The Time Value of Money — the discounting, annuity and IRR conventions used here
- US Federal Reserve — Regulation Z (Truth in Lending), APR calculation — why APR includes fees where a nominal rate does not
- ASIC MoneySmart — the Australian regulator's own consumer calculators
Last checked: September 2026. These are the standard textbook formulas; the conventions named are those of the CFA Institute curriculum and ISO 80000 usage.