How to Sensibly Build an Emergency Fund

Life is full of pleasant and unpleasant surprises! In an event of unemployment or loss, can you fork out a sufficient amount of money to shoulder the costs? Building a fund for these type of events must be one of your greatest financial priorities.


Whether you prefer call to it as emergency or rainy day fund, this fund did not get its names for nothing! The emergency fund allows you to create a breathing space to handle life’s highs and lows. Simply, it is the amount of money you have to keep to help cushion the cost of any unexpected and urgent events. Having additional savings means that you do not have to borrow from an institution nor do you have to experience immediate bankruptcy. This fund will drown your worries and give you the peace of mind!


You must take gradual steps if you are building an emergency fund for the first time. Begin by determining your fund goals. Write down exactly how much you want to save and provide a realistic deadline. It is ideal to have about 6 months’ worth of your salary in your emergency fund. As a starting point, save at least AU$500 per month. Break this goal into smaller weekly goals to make it seem more doable. Set elevated amount of savings after hitting your initial goal. This will ensure growth.


To ensure that your fund goals are met, you shall track your cash flow. Know where your money goes and where it came from by writing everything down. Log how much you make each month and subtract your fixed expenses (e.g., mortgage and insurance). Do not forget about the variable expenses (e.g., groceries and entertainment) too! After deducting all these expenses, the remaining money shall go to your emergency fund. Keeping tabs of your money will help you to save more of it.

Track cashflow

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If you happen to gain extra money due to tax refund or 13th month pay, use this to grow your emergency fund. Gathering your loose changes will help too!


Maximize your savings by eliminating unnecessary expenses and increasing income streams. Be vigilant when it comes to making spending cuts. If you do not need your cable subscription due to a cheaper online streaming service then, cancel it. If you are better off with a prepaid phone then, cancel your postpaid plan. If you only go to the gym twice a year, cancel your membership. Adopt a frugal lifestyle to reach your fund goals. You may also avoid impulse purchases and these shopping mistakes.


The last step to build an emergency fund is to increase your wealth. After exhausting all your resources to save money, it is time for you to create a side income. You may open a small online shop or take one some freelancing opportunities. The best way to earn additional money is to use the skills that you already have. Be creative!

saving coins

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When the subject matter is the health of your finances, an emergency fund is crucial. This is especially true if you are living overseas to support your family back in the Philippines. The most important steps that you can take right away are reducing your spending, maximizing your income, and building an emergency fund.


Since life is full of pleasant and unpleasant surprises, it pays to be prepared!

Anna Agoncillo

Anna is a Registered Psychometrician and a graduate of Cardiff Metropolitan University, United Kingdom. Earning a bachelor's degree with honors in Psychological Studies, lead her to a career of writing and teaching. She is also the author of the new book entitled Psychology of Love, Money, & Life.


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