The Ultimate Guide To Creating An Emergency Cash Fund

[vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_spacing=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” column_link_target=”_self” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][vc_column_text]In life, death and taxes are certain. For most people, rainy days are also becoming an absolute certainty and it’s no secret, life is expensive. Even if you have a well-paying job or thriving business, you’d be totally unwise to skip saving for a rainy day. What happens when an emergency hits? Will we have enough cash to deal with whatever life throws your way? In a country where most people are living from paycheck to paycheck, creating a rainy-day emergency fund is extremely important.

One of the biggest reasons people fail to save is not because they lack an adequate income, but because they lack the financial discipline to put some money aside on a regular basis. Financial emergencies can happen at any time and for people who are otherwise financially responsible and thrifty, a sudden financial emergency can push them into poverty. Unforeseen circumstances like car accidents, sudden sicknesses and even bad weather can bring with them debts and bills which can often put a strain on our personal funds

In this article, we will discuss the importance of an emergency cash fund and how to go about creating one.

Reasons To Build Your Emergency Fund

You Can’t Predict the Future

No matter how well life is going, one rule applies: You have no idea what’s just around the corner. It may be continued good days where everything is going your way–or it may be the opposite. Because you don’t know what you’ll be facing tomorrow, next month, or next year, you need to have emergency funds on hand. Being able to cover your expenses in case of job loss, injury, or another stressful situation is important.

It’s Not Hard to Do

One of the biggest reasons people don’t create emergency savings funds is because they think it will be too difficult or will interfere with their lifestyle. Building an emergency savings fund simply requires setting aside a small amount of money each month. Putting 5-10% of your monthly income into a savings account on the side will build up over time. The end goal is to have about 9 months of savings in your emergency fund. Then, in case you need it, it’s there.

There Are No Drawbacks

Having an emergency savings fund can only help you. There’s nothing it can do to hurt you. The small amount of money you set aside each month will not take away from your lifestyle, yet it will grow to be a large account over time. What’s the worst that can happen? You never end up needing the funds and you have several thousand dollars set aside as a cushion? That’s one of the best parts of having this kind of savings set aside–it can only help and benefit you.

It Eliminates Stress

Few things are more stressful than facing financial hardship on top of the situation that caused it. Let’s say you or a family member are facing unexpected medical bills due to an injury, disease, surgery, or accident. Whether or not you have insurance, there are likely going to be some bills to pay at the end of it. Having to stress about these bills on top of the illness leading to the bills is really undesirable. Having an emergency savings fund that will cover your expenses–in whole or in part–will allow you to focus on the main issue.

Get Out of Debt Faster

It may seem counter-intuitive but have emergency savings set aside can actually help you get out of debt faster. When you have 9 or more months of savings built up, it’s up to you whether you want to keep contributing to that savings account. If you decide to do something else with that small percentage of your income each month, you could put it toward paying off your debts. Alternatively, if you are ever faced with needing to cut down monthly costs, you could take from your savings and put a large chunk down toward your outstanding debts.

You’ll Live More Freely

It is painful to be tied down by money. Being held back from pursuing your dreams due to financial issues simply isn’t worth it. When you have savings set aside, you will take more risks and feel more confident. Fearing what will happen when a crisis occurs can be resolved with this type of savings fund. Of course, life isn’t all about money. But being prepared and using your finances wisely will set you up for a happier and more fulfilling life.

Person celebrating at laptop

How To Build an Emergency Savings Fund

Creating a rainy-day fund is one the smartest financial things you will ever do. Here’s how to do it quickly and comfortably.

Give Your Current Budget & Spending Habits a Second Look

Can you account for ALL your money, up to the last coin? If you can’t, you’re making a major financial mistake, which is living without a budget. And even then, having a budget doesn’t really mean you’re on the right financial path.

The first step to creating a rainy-day fund is to study your current budget or expenses and compare it with your monthly income. If your expenses equal or even surpass your income, you need to start cutting back immediately. Creating a monthly budget is one of the most significant things you can do to help build your emergency cash fund.

Keeping a record of all incoming and outgoing expenses can eliminate any financial anxiety and help to keep a frame around your income so that you only use cash for the right reasons:

  • Rent or Mortgage Repayments
  • Groceries
  • Household Maintenance
  • Work Uniform
  • Media Subscriptions
  • Travel Expenses
  • Gym Memberships
  • Medical Prescriptions
  • Bank Account Fees
  • Car Registration

Find Another Gig

Let’s be honest: many of us would be better at saving if we made more money. Unfortunately, not many people have the will to do whatever it takes to put an extra buck in the pocket. You’d rather sit and wait for a promotion than go out and look for a second job, right? Indeed, the best way to earn some extra money is to find a second job, which you can use to create your rainy-day fund.

Automate Your Finances

Technology has changed how we do a variety of things, from how we work to how we manage our finances. Today, you don’t have to settle your bills manually or physically. With financial automation solutions, your bills can be paid as soon as they are due, if money is in your account. With automation, the amount of money you intend to save for a rainy day will always hit the selected account without fail. Automating your finances reduces financial procrastination.

Find a Saving Buddy

Just like hitting the gym with a workout buddy, you have a better shot of financial success when you have someone with whom to pursue a common financial goal. Find a friend or relative who also wants to create a rainy-day fund and start the journey together. Motivate and hold each other accountable.

Look Out for Sweet Deals

Looking out for deals can make a big a difference in your personal finances and you can find deals for pretty much everything, from groceries to clothes and movie tickets. You just need to know where to look. Besides scouring the web for these deals, make a point to ask your local service providers for a discount or when they’ll be running a sale. Capitalizing on deals will save you money, money that you can put in your emergency fund.

Learn About Personal Finance Management

When you read books, magazines articles and blog posts on personal finances, you’ll have a better grip on how to go about several issues, including saving. Beyond reading, be sure to follow personal finance experts on social media platforms such as Twitter and Facebook. You won’t miss out on their financial stories and tips.

Additionally, seeking professional counsel will set you back a couple of dollars, but it’s completely worth it in the long run. A professional financial planner will have a thorough look at your personal finances, find gaps, spot extremes, and in the end, advise you on what you need to do to build your rainy-day fund.

Manage Your Debt & Don’t Take on More Debt

Loans can swallow a huge chunk of your income and deny you the chance to establish a rainy-day fund. If the money you pay in interest rates alone could be going to your savings, by now you could be boasting a healthy emergency fund. As such, you should make repaying your loans any other outstanding debts off as quickly as possible as a top priority to avoid paying more than the original balance due to interest.

Furthermore, avoid taking on any more debt as a means to create your emergency fund and if you’re a homeowner, DO NOT borrow against your home’s equity. This also applies for those who have applied for a loan which can swallow a huge chunk of your income and deny you the chance to establish an emergency fund. As such, you should make repaying your loans as quickly as possible a top priority.

Keep Emergency Cash in a Safe & Accessible Place

Though your emergency cash fund doesn’t necessarily need to be kept in a bank, especially if the account is tied up in investments. They need to be immediately accessible in the event of an emergency, so placing it in a separate savings account with little to no withdrawal limits or stipulations is the way to go. But keep in mind, this account is separate from your other savings accounts.

While you’re there, take the opportunity to automate your finances. Today, you don’t have to settle your bills manually or physically. With financial automation solutions, your bills can be paid as soon as they are due, and as long as money is in your account. And you can also set a certain amount, as little or as much as you want, to transfer into the emergency fund automatically.

Piggy Bank

How Much Cash Is Enough?

To begin with, you should set enough aside to cover at least one month’s expenses. However, as time goes and you’ve built your savings, your emergency fund should grow to cover a few month’s expenses or even a year. If you require a more accurate assessment on how to save or are just unsure, a professional financial planner will have a thorough look at your personal finances, find gaps, spot extremes, and in the end, advise you on what you need to do to build your emergency fund.

Budgeting and savings apps such as Goodbudget can help to track your spending effectively. It’s an expense tracker and money manager that’s great for home budget planning and is based on the envelope budgeting method.

Your Journey to a Healthy Rainy-Day Fund Starts Now

With the tips outlined above, now you shouldn’t worry about being caught unawares. You’ve all the information you need to easily start building your fund for tougher times. Start your journey today, and don’t forget to pop back and share your experience with us in the comments section below.

And if you find yourself caught up before you build the fund, feel free to reach out to us for a short-term cash advance. In this case, Cigno Loans act as your agent, with an easy application process — as well as management of emergency loans or bad credit loans, if you have a less than stellar credit history.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.



Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice –

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat