How To Avoid A Money Emergency

Last week the MoneyGirl showed us how to get our budgets in order. This week it’s time to start your emergency fund.


Now that you’ve started tracking your expenses, it’s important to protect yourself from the “what ifs”. We never know how life will turn out. Perhaps that precariously balanced coffee will be the end of your laptop. Maybe you’ll hit a pothole and need some car repairs. Or maybe that wisdom tooth will refuse to be ignored and a trip to the dentist might be in order. Who knows. In such times having an emergency fund can be a lifesaver. It can be the difference between having to get a loan, or not.

Depending on your current situation, it’s also useful to think of your fund in two ways – short-term and long-term. Short term funds should be easily accessible, and would be used on things like appliance repairs. Long-terms funds would cover instances such as job loss or major health problems. These funds should also be accessible, but could take a day or two to access so long as you have funds to cover the interim.

Of course, having two funds may not be feasible for everyone. And you may already have certain protections in place such as health insurance. But keeping such instances in mind is useful to protect yourself. Ultimately, it’s vital to think about what you can afford, your life stage, and what could potentially go wrong. Not exactly fun, but very important.

Be sure to consider if you’re also saving up for something else such as a mortgage or a pension. Any amount being saved into an emergency fund is going to be helpful! I usually advise that at least 15% of your monthly wage should go into a savings pot. Depending on your personal situation this could change, so if you’re still living at home then perhaps you can allocate more of your wages to the savings amount and an emergency fund. Well done for having an emergency fund, no matter how big or small!  – Emma Flaherty, MoneyGirl

Even setting aside €80 per month will leave you with over €1,000 by the end of the year. Nothing to be sniffed at if things go wrong. While it’s not the most exciting of savings, it should be high on your priority list. Some experts say that you should be able to live for 2-3 months on a long-term fund alone, some say up to six months. Find out what you can afford and what works for you. It’s important to look at your income. If it’s steady and high, try saving more. If it fluctuates from month to month, allow for that in your calculations and create your plan accordingly. The key is to set a goal that’s realistic and achievable.

Once you’ve your plan in place make sure you stick to it. One top tip is to set this up as an automatic transfer. You are less likely to miss the money if it is simply added to a separate account each month. If you manage to make savings in another area try popping those into your fund from time to time. It’s not as exciting as splurging on treats but it might just be your saviour.

If you’ve any other tips or tricks that have worked for you we’d love to hear them! In the meantime, you can follow or find out more about Emma Flaherty here: | Facebook | Twitter | Instagram

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