Saving for a rainy day: the lowdown on an essential emergency fund

There are no guarantees in life and our best-made plans can unravel as a result of an emergency, resulting in our finances taking a serious knock.

The shock becomes all the more unbearable if you have people who are financially dependent on you, be it your spouse and children or siblings and parents.

Although we can’t always plan for all of life’s eventualities, we can cushion the blows by setting up an emergency fund or contingency savings.


An emergency fund/contingency saving is money set aside to take care of emergencies. These are unexpected and unplanned expenses such as car repairs, burst geysers, insurance excess payments or being suddenly laid off.

It is best to have a fund for these circumstances to avoid using your savings or credit card/loans to pay them, which could lead to debt. An emergency fund acts as a safety net for your finances to avoid setbacks or negative effects.

Johannesburg-based personal finance blogger and author Nozipho Van Heerden says: “Emergency funds are like a financial seatbelt to save you during difficult times. If you were to lose your job, for example, you can use your emergency fund to buy food and other basics while looking for another job. Not having an emergency fund is the equivalent of driving without a seatbelt, which could get you into trouble when disaster strikes.”

Van Heerden says we should at least aim to save about 10% of our income every month for emergencies. This means reducing take-aways or a visit to Phindi’s Tavern from three times a week to once a week and throwing the savings into an emergency fund.

Emergencies by their nature are unannounced. They are sudden, unexpected and require immediate action from your side that might mean dipping into savings you have been building towards buying a plot or upgrading your kitchen.

How much is enough savings in your emergency funds?


Van Heerden says circumstances differ from person to person, but we should always aim to have enough money in the emergency fund to cover three months’ expenses.

“An emergency fund should be enough to cover between three to six months of your expenses. For example, if your expenses are R10 000 a month, then your emergency savings should be between R30 000 and R60 000,” says Van Heerden.

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