Originally published: August 2024. Updated: May 2025 to reflect current guidance and economic conditions.

With the cost of living still high in 2025 and inflation remaining sticky, more Kiwis are turning to emergency funds as a core part of their financial resilience strategy. Instead of worrying about every “what if,” the key is to take practical, proactive steps, and one of the most powerful is building a solid emergency fund.

This simple yet effective financial tool provides peace of mind, giving you the flexibility to handle unexpected expenses without derailing your long-term goals.

Why an Emergency Fund is Essential

An emergency fund acts as your financial safety net. It’s designed to cover unexpected expenses, like car repairs, medical bills, or job loss, without forcing you into debt or disrupting your regular budget.

Example: Imagine your car breaks down and needs a $1,000 repair. With an emergency fund, you can cover it without needing a high-interest credit card or short-term loan.

How Much Should You Save?

A common rule of thumb is to save three to six months’ worth of living expenses. This gives you a buffer that can handle both small and large disruptions.

Quick Calculation: If you spend $2,000/month on essentials, aim to save between $6,000 and $12,000. This gives you breathing room during tough times.

NZ Insight: According to the Financial Services Council, many Kiwis would struggle to access $5,000 in an emergency. So even starting with a small fund can put you ahead of the curve.

Steps to Build Your Emergency Fund

1. Set a Clear Goal

Start small. A target of $1,000 is a great first milestone to cover common emergencies and get momentum going.

2. Open a Dedicated Account

Keep your emergency fund in a separate savings account so it’s not mixed in with day-to-day spending. Giving it a nickname can keep you focused! Try something fun like:

• Emergency Fund
• Holy S**T Fund
• I've Got This Fund
• WTF Fund
• Feck You Fun

3. Automate Your Savings

Set up an automatic transfer every week or payday. Even small amounts build quickly when they’re consistent.

4. Start Small or Go Big

If your budget is tight, contribute what you can: even $20/week adds up. If you get a tax refund or bonus, consider putting a chunk of it toward your fund.

Example: $50/week = $1,000 in just 20 weeks.

Maintaining Your Emergency Fund

Once your emergency fund is in place, treat it like a fire extinguisher - only for real emergencies. Avoid dipping into it for non-essential purchases.

If you do use it, make a plan to top it back up as soon as possible. Life is unpredictable, and the fund works best when it’s fully stocked.

2025 Tip: Revisit your emergency fund target once a year. As your lifestyle or expenses change, your savings goal should too.

The Benefits of Being Prepared

Having an emergency fund isn’t just about money, it’s about mental clarity and financial freedom. Knowing you’ve got a buffer allows you to make better long-term decisions and reduces stress in tough moments.

Real-Life Impact: Whether it’s a dental bill, job layoff, or burst water pipe, being able to act quickly and calmly is a game-changer.

Final Thoughts

Building an emergency fund is one of the smartest, simplest financial moves you can make. It puts you in control: not your credit card, not the bank.

Start with a small, realistic goal. Automate your savings. Protect it. And when life throws you a curveball, you’ll be ready.

✅Next step: Once your emergency fund is in place, check out our 7-step Financial Check-Up for 2025 to build even greater resilience.

You’ve got this - and your future self will thank you!