No matter how money smart you may be, we all know emergencies WILL happen. From a geyser giving in, right in the middle of the month, to your little one losing their school jersey or that taxi fare going up once again! Emergencies will happen and they almost always need money.
Emergency funds can be explained as money (separate from your savings) that is set aside to cover life’s unexpected events and emergencies, a safety net. It should not be included in any long-term financial goals or savings. It is recommended you build your fund to at least 3- or 6-month value of your monthly living expenses.
This would allow you to be able to afford your monthly expenses in the event of:
- Unexpected travelling
- Retrenchment/losing your job
- Home repairs
- Illnesses
- Moving expenses
Having your own emergency fund can help you avoid:
- Financial stress
- Loan sharks aka ‘Omashonisa’
- Relying on credit cards
- High-interest loans
A bank savings account is considered one of the best options for building up savings towards your emergency fund. Try to ensure that it has minimum transaction fees and that it’s not a fixed/notice account. This will allow you to have access to money when needed urgently.
As tough as this may sound, it really is not. All it takes is planning and discipline and you will never have to worry about borrowing money from loan sharks or family again. It will allow you flexibility and security – everything we all wish for. Go on, give it a try.
