Should I Create An Emergency Fund?

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Published in
6 min readJul 21, 2023


Create an Emergency Fund With Moni

An emergency fund is a must-have for anyone who truly cares about their finances. If you’re a Nigerian living in Nigeria, you have to take extra effort to create an emergency fund because you have a lot to deal with — from the ever-increasing cost of living to the volatility of the economy; you can’t afford to not have a stash somewhere that will help when unexpected things happen.

Emergencies are the worst kinds of August Visitors — they arrive unannounced and demand urgent attention. Just the other day, my friend and I were heading home from an event and we ran into the usual traffic on Freedom Way, Lekki. We were jamming music and talking when we heard a bang. The driver in the car behind us had hit her rear light and it broke. The anger she got displaced that evening wasn’t because of the broken light but because the driver wasn’t going to be responsible for fixing it.

Now, this is an everyday possible emergency for car owners. Someone can hit you or you can hit someone. The driver, who hit us, for example, didn’t set out that evening to bash someone’s rear light. He also begged and begged because he couldn’t afford to fix it. He kept saying “Aunty, no vex! I no get money”.

My friend was faced with the following options:

  1. leave the car the way it was till she had enough money saved and end up facing some more billing from road/transport officials.
  2. not listening to the man’s pleading and insisting on him coughing up money to fix the car. This will have its emotional and mental toll.
  3. reaching into her savings or the money she set up for her expenses and fix it right away.
  4. borrow money to fix it from a friend if she doesn’t have anything left in her account or savings.

According to Investopedia, an Emergency Fund is money stashed away to help with unexpected and unplanned financial difficulty. This is also different from your regular savings which experts say should be 30% of your income.

Your monthly savings is your rainy day account while your emergency fund is your safety net account.

Did you know that during COVID-19, many people in many parts of the world weren’t ready for the emergency lockdown that the International Monetary Fund (IMF) had to help Nigeria with $3.4 billion for relief and aid?

Many Nigerians couldn’t afford to live, eat, or pay their utility bills during the compulsory lockdown because they had no emergency savings. And even though COVID-19 is long down, we still see other types of emergencies.

For example, in the first few months of President Bola Ahmed Tinubu’s regime, there had been drastic changes in the economy and in the rise of the cost of living. It started with the removal of fuel subsidy which resulted in an immediate increase in fuel price and ultimately resulted in the hike in transport fares. The electricity tariff also increased and people had to “manage their light” There’s also the major thing with the dollar to naira exchange rates.

The best thing about emergency funds is that the perfect time to create one is when nothing is happening; when everything is good.

Save on Moni today!

What’s the perfect size for an emergency fund?

One of the questions people ask is “How much money is “an emergency fund” enough? There are four factors that affect the size of your emergency fund:

  • Your financial situation
  • Your lifestyle
  • Your debts
  • Your expenses


Knowing your overall financial well-being — how healthy, lean, or unhealthy your finances are is a major determinant in creating an emergency fund. If you want to know the truth of your financial situation, you have to answer these questions:

  • How well am I securing my future?
  • How well can I handle a major expense?
  • Am I getting by or enjoying the things I want in life?
  • Am I worried that the money I have or have saved will never be enough?

Of course, there are more questions, but starting here helps you understand the real status of things.


The things that are important to you to have — across your needs and wants; are important to factor into your emergency funds. If you have a car, the state of your car and the kind of car affects your lifestyle. If you don’t have a car but always hail a ride to all the places you go, your lifestyle is more expensive than someone who also doesn’t have a car but uses public transport to wherever they go. You probably spend more money than them on Transportation.


Like we’ve said before, debts aren’t bad. Bad debts are the only bad kind of debt. Loans were created to help alleviate financial stress for both people and businesses. It’s okay if you have debts but it isn’t okay to not have a repayment plan. When you are thinking of the size of the emergency fund you should build, factor in your debt. The faster you pay off your debts, the easier it is to focus on your actual money and the health of your finances.


50% of your income covers your expenses — from day-to-day bills to everyday survival. You should factor in the total cost of your expenses when you’re thinking of building an emergency fund.

How Do You Build An Emergency Fund?

Decide how long you are considering: Are you building an emergency fund for 3 months, 6 months, or a whole year? This is different for each person because their lifestyle, expenses, and financial situations differ. If you live from paycheck to paycheck, our advice is to start small. Start with 2% of your income and then start to increase your savings as you go.

Use a Flexible Savings Account: An Emergency Fund has to be easily accessible. You can’t lock your emergency funds in a fixed deposit account for a long period of time. The kind of account you will use has to be one that allows easy access to your money just in case of an emergency. Did you know you can create an emergency savings fund on Moni? With the Periodic Safebox Plan, which is our most flexible plan; you can save either daily, weekly, monthly, or bimonthly and you can withdraw your savings in case of an emergency before you say Jack Robinson.

You can save as low as N100 on the Moni App

Use an account that pays you: Don’t make the mistake of just stashing money in a piggy bank. Because the economy isn’t reliable and the inflation rate keeps increasing, you want to see your emergency funds as an investment. Make sure that this flexible savings account is going to reward you for putting your money there. On the Periodic Safebox Plan on Moni, you can earn up to 19% on your savings, including your emergency fund.

Only use the funds for true emergencies: Did you know that a bowl of ice cream on a bad day can be an emergency? Well, I know. You will be tempted to reach into your emergency funds but you shouldn’t.

Create emergency buckets: Saving for a long haul without a well-defined goal can be overwhelming. You should break down the emergencies into different buckets to make them less overwhelming.

Create an emergency fund today on Moni today. Get started here.



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