Before we get started, let’s begin with the basics: What exactly is an emergency fund? An emergency fund is a cash reserve that is specifically set aside for unplanned expenses or financial emergencies.

These emergencies include:

• medical expenses
• Car repairs
• Living expenses in case of loss of job/ income etc.
• Family emergencies.
• Any other unplanned expense that needs immediate attention.

Remember COVID-19?

When the pandemic struck it left many people jobless while others were forced to take a pay cut. People still had to survive despite losing their jobs. Mouths still had to be fed, and other essential expenses still had to be incurred. Who do you think survived? Those who had an Emergency Fund survived that crazy season. Their savings gave them enough grace period to re-organize their lives (readjust their spending, get new sources of income etc).

Emergencies don’t send invites….so what happens when you don’t have an Emergency Fund?

You will never hear an emergency say “knock” knock” …because they don’t send invites.

• Your employer may delay your salary by a week or so and still your landlord may not understand.
• Phone screens don’t wait until you have money to break! Sigh!
• Medical emergencies aren’t planned either.

Remember, these emergencies must be sorted one way or another. If you have savings, good for you; if you don’t you are likely to:

❌ Borrow (with or without interest)-which can set you back financially; now and in the future.

❌ Sell items that you cherish to get money

❌ Struggle financially over these financial inconveniences.

How much should you put aside? Consider:

The “size” of your emergency fund might differ from another person’s. Here are a few considerations you should make when deciding how much to set aside:

1. Amount you will need to cover your monthly expenses.
2. Stability of your various sources of income
3. The number of people you support.

Note: Experts recommend saving amount equivalent to between 3-6 months of your living expenses.

Here are steps you can follow to calculate your emergency fund:

Step 1: Make a budget for all your monthly expenses (NECESSARY).

Step 2: Do a calculation of how much you can set aside each month.

Step 3: Open a separate savings account not your regular savings account.

Step 4: Set up a standing order from your “income account” to the emergency account until the emergency fund is fully funded.

Step 5: Use the monies for “real emergencies only”. Replenish the account later when you can (but make this intentional)

Calculating your emergency fund requirements & building it does not have to be complicated….

My Annual Budgeting Template makes it easy by:

✅ Guiding you on how you need to set up an emergency fund.
✅ Calculating how much you need to save depending on how many months you want your Emergency Fund to cover(3. 6, 12 etc)
✅ Helping you tracking your progress so you stay consistent.

Here is a preview of how my Annual Budgeting Template(with an Emergency fund Tracker) simplifies this process:

👉 Start building you Emergency Fund today! Click the link below to purchase my Annual Budgeting Template.[Shop]