Why an Emergency Fund Should Be Your Top Financial Resolution
Caty Naude CFP®
January is all about fresh starts. We set goals to exercise more, eat healthier, or learn new skills, but what about your financial health? One of the smartest resolutions you can make this year is to build an emergency fund.
Why It Matters
An emergency fund is your financial safety net for life’s unexpected surprises - a car breakdown, a burst geyser, or sudden medical bills. If you have ever had to cancel plans or dip into money set aside for other expenses to cover an emergency, you know how stressful it can be.
Unfortunately, most South Africans are not prepared. According to the 2023 Old Mutual Savings and Investment Monitor, only 30% of respondents have an emergency fund and that’s not even representative of the entire population. Without a buffer, many turn to costly debt, which chips away at long-term wealth.
The Benefits of an Emergency Fund
Peace of mind: Handle surprises without panic.
Avoid debt: No need to swipe credit cards or take out loans.
Stay on track: Keep your long-term goals, like retirement, intact.
How Much Should You Save?
Your ideal emergency fund depends on your circumstances. Contract workers often need a bigger cushion than salaried employees. A good rule of thumb is three to six months of living expenses, but do not let that number overwhelm you. Start small saving even R500 to R1000 a month which adds up over time.
Where to Start
Choose an accessible, low-risk option like a savings or money market account. At Ascor, we will help you select the right product and set up a monthly debit order, the easiest way to build your fund without thinking about it.
Your Next Step
Make this your best resolution yet. Contact a CFP® professional at Ascor Independent Wealth Managers today. We can help you create a plan that fits your lifestyle and future goals.
Read more about Ascor® Financial Planning Services
