Failing to plan is planning to fail. When it comes to your personal finance, there’s not a more dependable truism. It’s only when you’re faced with an unexpected emergency and you have no money to pay for it that you realise how valuable a little preparation would have been. Instead of setting yourself up for failure, rather plan and prepare for those inevitable rainy days by creating an emergency fund.

Why an emergency fund is important 

When you find yourself in a position where you need to pay for something unexpected like a burst water geyser or a doctor’s bill, it’s easy to turn to personal loans and credit cards. But such solutions only create a cycle of debt-dependency – not to mention limit your credit. An emergency fund, on the other hand, can earn you interest until you need it.


The truth is that you should start saving immediately and with whatever you have. Even R50 is better than nothing, and once you’ve begun, it’s easier to keep it up and focus on putting aside that little extra every month. If you think you may struggle sticking to your savings commitment, arrange a debit order. This way, your savings will be deducted along with all your other debit orders and you won’t have to worry about remembering to make a deposit each month.

What kind of account to use for an emergency fund

Starting an emergency fund is simple. You only need to open a separate account and put some money in it. Choose an account that is safe, reliable and accessible at a reputable institution. 

It must have an interest rate that matches or beats inflation

If you put your money into an account with an interest rate that doesn’t match inflation, your savings will actually lose value. With the economy in the state it’s  in, you need a savings account that gives you an interest rate of at least 6.5%. The rate of return on the Old Mutual Money Account is 7.1%.

You must be able to access your money instantly 

When things go wrong, you need to be able to access your savings in a hurry. Given that most savings accounts make it difficult to access your funds at a moment’s notice, you may think that a regular transactional account is the best to keep your emergency fund, but there’s a better option.

It should be linked to a transactional account 

The Old Mutual Money Account gives you the best of both a savings account and a transactional account by linking the two. Savings are kept in a Old Mutual Money Market Fund account, which you can access at any time, while the transactional account allows you to use your money as you wish. That’s an average return rate of 7.1% and the ability to access your money instantly. 

To learn more about the Old Mutual Money account, read our article A savings account that works like a transactional account,  or go to our Money Account page

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