How much emergency funds do you need in Singapore?

If Covid taught us anything, it’s this: life is unpredictable. Jobs can be lost (I myself was severely impacted by the Covid situation and did not have a full time job for a year). Illnesses can strike. Unexpected emergencies can burn a hole in your pocket. That’s why building an emergency fund is never a luxury. It’s a necessity.

As we navigate 2025 with rising living costs, economic uncertainty, and global instability, every Singaporean; from young working adults to those juggling families, should have a solid emergency fund in place.

💡 What Exactly Is an Emergency Fund?

An emergency fund is a stash of money set aside for life’s unexpected expenses. Think retrenchment, medical emergencies, or your aircon suddenly dying.

Unlike investments, which can fluctuate or take time to liquidate, an emergency fund should be liquid, stable, and easily accessible.

🎯 How Much Should You Save?

The general rule of thumb is 3 to 6 months’ worth of essential expenses. But in Singapore, where cost of living is relatively high, here’s a practical breakdown:

💡 Tip: Focus on “essential” expenses — rent/mortgage, groceries, utilities, insurance premiums, and transport. In times of emergency, I’m sure you can waive off non essential spending.

🧮 Step-by-Step: How to Build Your Emergency Fund in Singapore

1. Calculate Your Monthly Essentials

Open your bank app and check your last 3 months of spending. Look at:

• Housing loan/HDB rent
• Utility bills
• Mobile plans
• Insurance premiums
• Transport
• Food & groceries

Let’s say your essentials total $2,500/month. Aim for $7,500 to $15,000 as a starting emergency fund.

2. Open a Separate High-Interest Account

Don’t park your emergency fund in your main spending account. Open a separate savings account or use savings goals or pockets that many banks now provide. Alternatively, you can consider Chocolate Finance for a no-frills, no lock-in 3%.

3. Set a Monthly Savings Target

Start small if needed. Even $300/month is great if you’re consistent.

Example:

• Save $500/month → You’ll hit $6,000 in just a year.
• Automate it. Set a recurring transfer the next day after your salary hits. This way, you don’t have to think about it, and feel any pinch.

4. Cut Costs Strategically

To free up money for your emergency fund, consider:

• Downgrading your mobile plan (SIM-only options from Giga or Circles.Life)
• Cooking more often instead of frequent GrabFood
• Cancelling unused subscriptions (I mean, do you really need Netflix, Disney+ AND Prime Video??)
• Using public transport over private hire rides

5. Use Side Hustles or Bonuses

Leverage:

• Part-time gigs
• Freelance skills
• Selling on Carousell
• Trading as a side hustle

Stash 100% of side income directly into your emergency fund account.

6. Don’t Invest This Money

Your emergency fund should be low-risk and liquid. When a true emergency hits, you don’t want to be worrying about market dips, and want to be able to access these funds as quickly as possible.

🚨 When to Use (and Not Use) Your Emergency Fund

Use it for:

• Medical emergencies not fully covered by MediShield Life or private insurance
• Job loss or retrenchment
• Sudden urgent repairs (home, car)
• Family emergencies (e.g., flying overseas last minute)

Avoid using it for:

• Holidays to Japan (budget for this separately)
• Pixel phone upgrades
• Wedding gifts or Ang Baos
• Shopping splurges

If you ever have to dip into your emergency fund for whatever reason, make sure topping it back up to the optimal amount is the first priority once you get over the emergency period.

🛠 Emergency Fund Checklist

✅ Calculate your essential expenses
✅ Set your emergency fund goal
✅ Open a separate high-interest savings account
✅ Automate your savings monthly
✅ Reduce unnecessary spending
✅ Avoid touching it unless it’s a real emergency