Imagine this: It's the 20th of the month. Your salary is almost finished. Suddenly, your car engine knocks, or your landlord gives you a quit notice, or a family member falls sick and needs money urgently.
What do you do? Call your rich uncle? Borrow from a loan app at 30% interest?
This is where an Emergency Fund saves you. In Nigeria, where the economy is unpredictable, this is your "Village People Insurance".
What is an Emergency Fund?
An emergency fund is cash set aside strictly for unplanned financial disasters. It is NOT for:
- Buying the latest iPhone.
- Aso Ebi for your friend's wedding.
- "Dorime" at the club.
- Crypto investments.
It IS for:
- Job Loss: If you lose your job today, how long can you survive?
- Medical Emergencies: Nigerian hospitals often demand deposit before treatment.
- Car/Generator Repairs: Essentials for movement and power.
- Unexpected Rent Increase.
Why You Need It Before Borrowing
1. Avoid Loan Sharks (Loan Apps)
If you have no savings, you are one emergency away from downloading a predatory loan app. These apps harass your contacts and charge insane interest rates. An emergency fund protects your dignity.
2. Peace of Mind
Knowing you have ₦200,000 - ₦500,000 somewhere safe allows you to sleep better. You won't panic when you hear a strange noise in your car.
How Much is Enough?
In the West, they say 3-6 months. In Nigeria, due to high inflation, 3 months of living expenses is a good start.
- Example: If you spend ₦100,000 monthly to survive (Food, Transport, Data), aim for ₦300,000.
Where to Keep It?
Your emergency fund must be easy to withdraw (liquid) but hard to spend (separated from your main account).
- Good: A separate savings account (e.g., Kuda, OPay) or a flexible savings plan (PiggyVest Flex) that gives interest but allows withdrawal.
- Bad: Fixed Deposit locked for 365 days (what if you need it tomorrow?), Crypto (it might crash when you need it), or Cash at home (inflation will eat it).
Start small. Even saving ₦5,000 weekly adds up. Don't wait until "Sapa" chokes you!
👉 Calculate your monthly budget with our Budget Calculator
Written by Calc Labo Research Team