When life happens, finances feel it first
Unexpected expenses like car repairs, medical bills or home issues can hit hard. Research shows emergencies are the leading reason South Africans apply for personal loans.
According to Gavyn Letley, Product Head at DirectAxis, having an emergency fund can make these situations far less stressful.
The gap insurance does not cover
While many people insure big risks like homes, cars or health, everyday problems are often not covered.
Things like broken appliances or urgent repairs can still disrupt your finances if you are not prepared.
Why an emergency fund matters
An emergency fund helps you avoid debt and manage sudden costs with less pressure.
Ideally, you should aim to save at least three months of living expenses. Even small monthly contributions can build up over time.
Tax-free savings accounts are also worth considering, with annual limits now at R46 000.
When borrowing becomes necessary
Data from DirectAxis shows:
- 28% of people take personal loans for emergencies
- Around 20% borrow for home improvements
- Nearly 11% use loans for education
If you do need a loan, having a good credit record is essential, as lenders have strict affordability checks in place.
How to start
- Save around 5% of your income monthly
- Keep savings in a separate account
- Automate transfers where possible
- Rebuild your fund after using it
Start small, stay consistent
You cannot always avoid financial surprises, but you can prepare for them.
Even a small emergency fund can make a big difference when life happens.
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