It just hit me the other day, that although I have a savings account, and there is ‘some’ money in it, which fluctuates between zero and negative, I have never sat down and come up with a serious emergency fund. A figure that I know if push came to shove, this account would be able to bail me out, or keep me afloat in case anything happened to me. I know I am not alone in this. We all have that savings account, which sometimes has money, and sometimes has no money. That is not the ideal, if you are like me, then its about time we got serious in establishing an emergency fund that we know can stand the surprises that life throws at us.

What steps should you follow in establishing an emergency fund?


It is important to get to know all your important costs or expenses. Expenses like rent, utilities, car payment, car insurance, grocery shopping, come to mind. These are the expenses that you cannot live without! Things like going to the movies, eating out, money to go clubbing are more luxurious things than life’s necessities. Remember, when you have an emergency, you will definitely not be thinking of the latest block buster movie. So you have to get to know your most important expenses, that if not paid, will affect your quality of life. The purpose of an emergency life is to keep you afloat, while you are trying to sort yourself out. Emergencies include a job loss, death, hospital visit, major car break down etc.

“Rome was not built in a day”

Remember to start small! If you think that you will have a healthy fund within one month, you are just setting yourself up for failure or disappointment. Work towards a fund that will cover a dental visit, a car repair, a hospital visit etc, then your can grow it month by month or check by check.

End goal?

Your long term goal, is to have a fund that can cater for your monthly expenses in case you lose your job, natural disasters like flooding or fires, a death in the family, or in case of a two person income house hold, when one of the partners is not able to bring in the same amount of income.


I have always made the mistake of using my regular account that I use for every day spending as the same one I use for my savings. What this means is that, because I have easy access to it, and because I do not have a definite figure, then I have always found myself in instances where I use some my savings. Usually on expenses that are not necessarily emergencies. Like when a casual visit to the mall leads to me leaving with bags loaded with stuff, stuff I had not planned for.

Get a separate savings account

The ideal thing is, if you can, to get a separate savings account, one that you do not have immediate access to. If you get a debit card with it, do not put that card in your wallet, if you get a check book with it, hide that check book. As much as we would like to trust ourselves and our self control, we eventually yield to temptation and ‘dig’ into our savings, having in mind that, we will replace it with the next check, WHICH RARELY happens!


After you know your target for your emergency fund, and after knowing how much per month will go to the fund, it is important treat that figure as a bill or an expense. Maybe you have automatic payments on your rent, insurance, loan payments, then this is one more thing you need to make as automatic as possible. If you get paid by direct deposit onto your account, then be sure to set up an amount that goes to your savings account directly. That way, you eliminate the chances of you falling into temptation and not making a deposit into that account.

The most important qualities you need to have, in order for you to be successful in setting up and growing your emergency fund are 1) discipline – so that you follow your plan through and through, 2) determination – so as to be sure that you see it through no matter what and 3) perseverance – since it is not easy and temptations will come your way, your colleagues will seem like they are passing you by, and its a slow painstaking process.

Peace of mind

However it will be worth it by the end of the day! Think about how after attaining your set goal, you will have the peace of mind of knowing that you have a financial cushion that can absorb some of lives shocks!

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