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Your Emergency Fund – How much is enough?

Kabo*: “What am I going to do?” “It’s just after mid-night, I can’t sleep. I don’t know what to do.My car started making a clunking noise last week, and today it stopped working completely.”

My job (I’m a sales rep) requires me to have a car. If it’s not working I can’t work.  I don’t know what I’m going to do.”

“I’ve had a very expensive month so far, and it is only the 18th. I’ve got another week to go before payday. Only then will I have the money to fix my car. What will my employer say?”

“How much will my income be next month if I can’t work this week? I rely on my commissions.  I don’t know what I am going to do.”

“Maybe I can ask my family to help me with some money, or maybe I can go and see that loan company.  I could ask my bank for a loan, but I don’t want them to know my troubles because I want to apply for a home loan soon. I’m worried it will affect my chances if they see me struggling now.”

“What am I going to do?”


Does any of this sound familiar to you?

We’ve all at some stage experienced a time where we were desperately in need of some money to cover an emergency.  Whether it’s a lost cell phone, a household problem (like theft or fire) not being able to work or perhaps a family medical emergency. These are all examples of crises that happen - that we can’t plan for. Surely there must be some way we can plan ahead to avoid this type of situation in our lives.


We all need an Emergency Fund

Luckily, there is something we can do. We can plan for all unforeseen emergencies if we have some savings reserved for such emergencies. This is commonly known as an Emergency Fund. As the name suggests, it’s a fund that’s there to be used for emergencies.

 The questions to ask yourself when planning your Emergency Fund are:

1. Why might I need cash in an emergency?

2. Have I ever needed this sort of help in the past?

3. How much cash might I need?

To answer these questions you need to consider your own personal situation. In a recent Financial Wellness workshop, one of the attendees said the main emergency that worried her was if her young daughter was at home and fell ill, the ambulance would charge P500 cash to take her to hospital.

If she couldn’t be reached, the maid had to know where to find the money. So she hid her Emergency Fund in a secret place at home – known only to her and the maid.

However, it’s rare that we can only think of one emergency, and we should plan our Emergency Fund to cover more than just one potential problem.

One Month’s Salary

The basic rule of thumb is your Emergency Fund should be at least one month’s salary.  Now consider the possible emergencies you came up with when answering questions 1 & 2. Will one month’s salary cover those emergencies?

Here are some examples of the things you might need emergency cash for:

My son gets sick on a trip to SA – medical aid won’t pay and I have to send money fast

My kitchen catches on fire – I need to replace my stove and my fridge – quickly

My Aunt dies – I need to contribute to the funeral this week.

My handbag is stolen the day after payday – I’ve lost a month’s cash and my cellphone

I get sick for 2 weeks – how will I replace the lost income from my business?

My daughter has a once-in-a-lifetime opportunity to go on a trip with the school sports team – can I come up with the cash?

My parents are coming to stay – how will I pay for the extra food?

I get a huge utility bill – they say they’ll cut me off if I don’t pay. You must also consider: where do you keep your Emergency Fund that it is safe, yet accessible in an emergency? At home? In the bank?

My Emergency Fund must be:


Easy to Access Quickly

Not used for non-emergencies!

Lastly, you must be strong enough in your will-power not to spend your Emergency Fund on something that is NOT an emergency. It is not a fund that you can take loans from to buy that pair of shoes, or a fancier cellphone.  Remember: because it is easily accessible, you must be strong enough not to touch it – unless you’re in real trouble!


© S.C.I. Author -Elaine DuToit Training run financial wellness programmes in Botswana. For help and information contact them on 3180243 or

* Elaine DuToit Names in this article have been changed




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