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Emergency Funds Explained


Emergency Funds Explained

No matter how money smart you may be, we all know- emergencies WILL happen. From unexpected geyser problems in the middle of the month to your child losing their school jersey or your taxi fare going up again! Emergencies will happen and one thing is certain - they will require money.


What is an emergency fund?

An emergency fund is 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’s usually recommended that you build your fund to at least 3-or a 6-months value of your monthly living expenses. This would allow you to be able to afford your monthly expenses in the event of:

  • Unexpected traveling
  • Retrenchment/losing your job
  • Home repairs
  • Illnesses
  • Moving expenses

Having your emergency fund can help you avoid the following :

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  • Financial stress
  • Loan sharks aka 'Omashonisa
  • Relying on credit cards
  • High-interest loans

A bank savings account is the best option for building and saving toward your emergency fund. Ensure it has minimum transaction fees and that it is not a fixed/notice account. This will allow you to have access to money when needed urgently.

As difficult as this may sound, it 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.

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

© 2022 Zanele Mokoatle

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