skip to content Header Widget (c#)
ME Bank ME Logo
Banking & saving. Home loans. Credit cards. Term deposits. Personal loans.
Support Search Login
Home. Banking & saving. Home loans. Credit cards. Term deposits. Personal loans.
Support. Login.
About us. Contact us. Find an ATM.
The feed
ME Blog Item (C#) - Visible for a specific page if its parent control is a template with a repeater and has a Blog Widget on it

How to build an emergency savings fund (and why you need one)

15 Nov 2019

How to build an emergency savings fund

Like a kebab on the long walk home, an emergency savings fund can help you get through a difficult time.

No one likes worrying about large unforeseen bills or financial emergencies. But luckily, there are savings strategies that’ll help you plan for the unplanned and build financial resilience. From a busted laptop to losing a job or a messy break-up, an emergency fund ensures you have enough money to get you through.

An emergency fund is a stash of cash that you can access to help cover the cost of any urgent and unexpected expenses. It’s money that you have specifically saved up and put aside. It’s not linked to your everyday savings account or dream holiday fund – as the name says, it’s for emergencies only, not for dipping into for a new dress or shouting drinks on a Friday night.

Is an emergency fund really necessary?

Life is full of curveballs. And who knows what’s around the corner. An emergency fund means you won’t have to rely on high-interest loans or credit cards to cover the cost of repairs, household bills, vet bills or rent. And if you’re saving for a house deposit, an emergency fund could prevent you from dipping into your hard-saved bucks.

Australians still feel the least comfortable with their ability to cope with a financial emergency with 20% of households saying they didn’t think they could raise $3,000 in an emergency.

Building an emergency funds can be a fantastic place to start if you’re looking to form good money habits, savings momentum and empower yourself to be more financially confident.

How much should be in my fund?

According to Mozo, an emergency fund should have enough money to cover three months’ worth of expenses. Think about all the bills, financial commitments and needs you need to live for three months. Expenses like oat milk lattes and three course meals shouldn’t be accounted for, but costs like rent or mortgage repayments, groceries, insurances, medicine and transport costs should be included.

If starting with three months’ worth of expenses is a daunting goal, start with a round number like a balance of $3,000 to build momentum. The most important thing is you begin.

ME Image Widget (C#) - Visible for a specific page if its parent control is a template with a repeater and has a Blog Widget on it
short term goal long term goal

Start with a smaller goal to create momentum.

How do I build and maintain an emergency fund?

Okay, so we know that creating an emergency savings account will help us sleep a little better at night and build financial resilience. So how do you start saving? Developing an emergency fund strategy is easy; it just takes a little planning and commitment. In no time you’ll be seeing progress and feeling more secure.

1. Track your expenses

It's easy to lose track of the money you spend. By recording where your dollar goes (those froyos can really add up) you can see where you can cut back and save. Track your expenses by reviewing everything you’ve spent your hard earned dollars on and categorising them.

Once you have a clear idea of all your expenses, you’ll know how much money you can contribute, where you can cut back and how frequently you need to deposit to reach your emergency fund goal. Using a savings calculator can help breakdown the periodic payments you’ll have to make to reach your balance.

2. Set some ground rules about what your fund is for

Set a few guidelines about what your emergency savings can be used for (tickets to see Taylor Swift is not an emergency). This way you won’t be tempted to dip into your money for trivial reasons.

Expenses like vet bills, unforeseen medical bills or if you end up without an income and need to pay your rent are the right things to think about when devising your emergency spending guidelines. Remember, we’re trying to establish good money habits here so setting some parameters is key to long-term success and financial comfort.

3. Build one-off bills into your budget

Annual expenses like insurance renewals or car registration aren’t a financial emergency. These expenses can be planned out and saved for by setting a budget.

If you still need to stash your cash for larger purchases or goals, get multiple savings accounts. You can set up separate savings accounts for each of your major savings goals, using a ‘Bills’ account to smooth out your larger expenses. Include a small portion of your budget towards a bills saving account and build a buffer for those larger periodic expenses.

Remember to build these into your budget so that you’re not raiding emergency savings unnecessarily.

ME Image Widget (C#) - Visible for a specific page if its parent control is a template with a repeater and has a Blog Widget on it
emergency fund account

Whether you’re saving for Byron Bay or bills, create accounts for each of your life goals. An emergency savings fund is the best place to start.

4. Avoid impulse buying and maintain your focus

Until you’ve hit your emergency savings goal, avoid impulse purchases and try to stick to your savings plan.

Get serious about building your emergency fund and dedicate any spare cash you have until you reach your initial goal. The momentum of knowing you’re creating a safety net should be able to keep you going when tempted by those Friday night cocktails or a cheeky ASOS order.

5. Keep it separate

A key aspect of this savings plan is deciding where to store your emergency funds. Ideally, you need an account that’s accessible, but not so easy to dip into that it becomes your go-to money for impulse buys.

A good plan is to keep your emergency savings in a bank account that’s not directly connected to your transaction account so it’s harder to transfer out of. An online savings account can be a good option, especially if you let interest earnings do part of the heavy lifting by choosing an account paying a consistently good rate with no strings attached. An account that won’t sting you for moving your money around is a bonus, so there’s no penalties when you need to access your emergency dollars.

Start building a secure future.

With a pool of emergency funds under your belt, it’s easier to protect your future-self. You will be ready for any bumps in the road and a small financial hiccup won’t plunge you into debt or eating into a house deposit you’ve saved so hard for. If you’re ready to start stacking your emergency savings, ME can help you reach your goals sooner.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.


Make a savings plan.

Learn more about savings and crunch some numbers. Let's turn your trickle of savings into a river of wealth.

Save more now.

How much should I spend on a wedding gift?

How much should I spend on a wedding gift?

How to set a SMART savings goal

How to set a SMART savings goal

Quit the fad budgeting diets, start really saving with bucket budgeting

Why you need to start bucket budgeting


View related articles on:

money tipsgoal settingsaving
Footer Widget (c#)
Contact us. About us. Find an ATM. Blog. Ed. Media.
Privacy. Legal.

Members Equity Bank Limited ABN 56 070 887 679 AFSL and Australian Credit Licence 229500.