As someone who has experienced the anxiety of unexpected expenses, I can tell you firsthand that having an emergency fund can be a lifesaver. It’s one of the first steps I took when I began my personal financial journey, and it’s something I encourage everyone to consider.

So, what exactly is an emergency fund? Simply put, it’s a pot of money set aside specifically for unexpected expenses or emergencies. Think of it as a safety net that can help you weather the storms of life without having to resort to nkongole (Loans) or Credit. Personally, I like to think of my emergency fund as my own insurance policy that protects me from me.

Having a budget and a financial plan is great but life is unpredictable, and unexpected expenses can arise at any moment. Whether it’s a medical emergency, a sudden car repair, a job loss, or a pandemic, having an emergency fund can help you weather the storm. The importance of an emergency fund cannot be overstated.

Curious about the financial preparedness of my fellow Zambians, I sought out information on their financial positioning and was unsurprised to discover how ill-prepared many are for emergencies. The Bank of Zambia Finscope 2020 survey revealed some concerning statistics. Only 13.6% of Zambian adults are considered financially healthy, and of that group, a mere 4.5% stated that unexpected expenses were not a challenge. These numbers indicate that a significant portion of the population is vulnerable to economic downturns and potential financial disaster.

So, How do you set up an emergency fund? It’s actually quite simple, and anyone can do it. Here are the steps:

  1. Determine your target amount: The first step is to determine how much you need to save. Experts recommend having at least three to six months’ worth of living expenses saved up, but it’s up to you to determine what makes you feel comfortable. Take a look at your monthly expenses and multiply that number by three or six, depending on your preference.
  2. Choose a savings account: Next, you’ll need to choose a savings account to hold your emergency fund. Look for a savings account with a high-interest rate, as this will help your money grow over time. Also, make sure the account is easily accessible, as you may need to access the funds quickly in an emergency.
  3. Automate your savings: To make it easier to save, automate your savings. Set up a direct deposit from your paycheck into your emergency fund savings account each month. This way, you won’t even have to think about it.
  4. Build up your fund: It may take some time to build up your emergency fund, but don’t get discouraged. Keep contributing to the account each month, and over time, you’ll reach your target amount

Once you have your emergency fund set up, it’s important to position the funds in a way that is sheltered from risks and accessible.

Remember, your emergency fund is meant for true emergencies. It’s not for that new pair of shoes you’ve been eyeing, the spontaneous trip to Siavonga, or because you only live once #YOLO. Save it for things like unexpected car repairs, medical bills, or job loss. Saving for a rainy day is one of the most important things you can do for your financial well-being. It may not be the most exciting part of managing your finances, but it’s a crucial step on the path to financial freedom. Start small, automate your savings, and build up your fund over time. You never know when you’ll need it, but having an emergency fund will give you peace of mind and financial security.