If you’re from Africa, especially Nigeria where I’m from, you’ll be very familiar with the concept of having “the blood of Jesus” handy as a prophylactic measure for anything that might happen to you but as we all know, life happens; like one losing their job or getting so sick and you’re unable to work. Being prepared especially financially will go a long way in ensuring that there is a safety net to sustain you till you can get back on your feet and that is where Emergency funds come in.

Emergency funds are your stash of cash specifically for those unexpected expenses – think medical emergencies, sudden job loss, or your car deciding to throw a fit. The aim? To have enough saved up to keep your ship sailing smoothly without diving into credit card debt or scrambling for loans.

Emergency funds are like your financial safety net, basically money set aside solely for the purpose of emergencies.

How Do You Calculate How Much You Need in Your Emergency Funds?

Figuring out how much you need in your emergency fund is a bit personal and unique to everyone as it’s usually based on your current living conditions but a rule of thumb is to calculate everything you spend on your needs monthly and multiply that amount by three; some school of thoughts would advise six, depending on how easy you think it is for you to get another job or get back on your feet.

Using myself and my present living condition as an example, here is how much I’ll typically need to save up in my emergency funds; Here is how much I spend on my needs monthly:

Basic monthly living expenses:

Rent (monthly): £550*

Utilities: £100

Phone contract: £125

Food and groceries: £150

Transportation: £80

Total: £1,005

*If you pay your rent yearly, you can either choose to use a year's worth of rent or divide your rent by 12 to get the monthly equivalent.

This brings my total monthly expenses to £1005. My emergency funds would be this multiplied by 3/6, This means, my emergency funds in three months would amount to; £1,005 X 3 = £3,015 and Emergency funds in six months:  £1,005 X 6 = £6,030 (approx. £6,100).

Please understand that you do not need to save your emergency funds all at once, in fact, you should contribute to it monthly till you get to the desired amount and you can stop contributing.

Also, your emergency funds should be quiet accessible to you, so it is not advisable to put your emergency funds in a fixed deposit, neither should it be invested because you don’t want to expose these funds to any type of risk; low or high.

Typically, your emergency funds should be in an HISA- High Interest Savings Account (not a fixed-deposit HISA) where you can earn interest but still have immediate access to it.

I also made a video on Instagram explaining all of these in details, watch it here.

If you used the method above to calculate your emergency funds, please let me know what your own approximately value is, if you’re comfortable sharing.

Also, if you have any question(s), please feel free to ask in the comments or send me a DM on Instagram or Twitter.

I hope you found this helpful.

Don’t forget to keep growing and stay glowing.