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Emergency Fund Singapore: How to Start and Grow Your Reserves

emergency fund singapore
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Are you equipped to navigate the financial waves of unexpected expenses? In life’s sea of unpredictability, having an emergency fund is like a lifejacket, providing you with a buoyancy aid when turbulent times hit. However, the process of creating and growing an emergency fund can often seem daunting, especially in a country like Singapore, known for its high cost of living.

But setting aside money for unexpected emergencies doesn’t have to feel so unattainable. According to financial experts, you need to set aside at least 3 to 6 months’ worth of salary. But the amount you should set aside will depend on your preferences, spending habits, and lifestyle.

Here we will outline how much money you should ideally save, how to allocate and optimize these savings, and the best ways to grow your fund over time.

What is an Emergency Fund?

An emergency fund refers to a bank account where users set aside money in order to cover large and unexpected expenses like medical emergency bills, appliance repair or replacement, major car repairs, unemployment, and many others. 

It is a personal budget meant for future problems and mishaps. It may come from your savings or other personal funds. You should dedicate your emergency fund only to unforeseen events and situations. You should not use this fund for some other purposes.

Why Do I Need an Emergency Fund?

 An emergency fund can be your financial safety net during times of unexpected crises. Here are some of the pros and cons to consider.

Pros of Having an Emergency Fund:

  • Financial Security: This is the primary reason for setting up an emergency fund. In the event of a sudden job loss, medical emergency, or unexpected household repair, your emergency fund can cover these expenses without derailing your regular budget or forcing you into debt.
  • Less Stress: Knowing you have a buffer can significantly reduce your stress levels when facing a sudden financial burden. It provides peace of mind that you can handle emergencies without financial ruin.
  • Greater Financial Freedom: An emergency fund gives you more flexibility in your financial decisions. For instance, if you want to make a career move or invest in a new business opportunity, having a financial safety net can give you the courage to do so.
  • Avoidance of Debt: Having an emergency fund can prevent you from taking on high-interest debt, like credit card debt, during a crisis. This is particularly important as such debt can often compound the financial stress in an already challenging situation.

Cons of Having an Emergency Fund

  • Opportunity Cost: The money you put in your emergency fund could be used for other financial goals, like paying off debt, investing, or increasing your retirement savings. While the funds are necessary for emergencies, they often sit in low-interest accounts and don’t contribute to wealth growth as much as other investments might.
  • Liquidity Challenges: If you lock your emergency fund in time deposits or other less liquid assets for better interest rates, you might face challenges accessing the fund when you need it.
  • Over Savings: There’s a risk that you might save too much in your emergency fund, especially if you’re particularly risk-averse. This could hinder you from reaching other financial goals and tie up your money unnecessarily.
Payday Money with Laptop and Mobile

How Much Should I Save?

The rule of thumb as suggested by many financial experts is to have 3 to 6 months’ worth of living expenses saved up in case of emergencies. However, with the uncertain global market, rising inflation, and increasing cost of living, you might want to consider saving up 1 to 2 years’ worth of expenses as a safer bet.

  • Your Monthly Expenses: As previously mentions, you must always take into account all your regular expenses, including rent or mortgage, utilities, groceries, transportation, insurance, and any debt payments or other recurring costs.
  • Multiply by 12 or 24: Multiply your monthly expenses by 12 for a one-year emergency fund, or by 24 for a two-year fund. This gives you an idea of how much you need to save to cover all your costs for a year or two in case of a severe financial emergency.
  • Consider Your Personal Circumstances: Your ideal emergency fund will also depend on factors such as job stability, the number of income earners in your household, your health, and your family size. If you have a stable job, no dependents, and good health, you might feel comfortable with a smaller emergency fund. If your job is less secure, you have dependents, or you have health issues, a larger fund can provide extra peace of mind.
  • Adjust As Needed: As your life changes, so should your emergency fund. Review your fund at least once a year to make sure it aligns with your current needs.

Where Do I Put My Emergency Fund?

The best place for you to put your emergency fund is a savings account with a high-interest rate. Since you are putting in a large sum of cash (worth 6 months of your living expenses), you want your cash to earn interest. Hence, you have to find the financial institution or bank offering the highest interest rate.

Here are some of the banks offering high-interest rates on their savings accounts:

Savings account Interest rates

HSBC Everyday Global Account

0.05% to 5.70%

DBS Multiplier

0.05% to 4.10% 


0.65% to 7.80%

OCBC 360

0.05% to 7.65% 

Standard Chartered Bonus Saver

0.05% to 7.88%

Bank of China Smart Saver

0.10% to 5.90%

Also, you must choose banks or institutions with a reputation. In terms of security, you have to ensure that the bank you chose can guard your funds against any physical or online threats. Remember that your emergency fund is a fruit of your labor and dedication—only trust banks with proven experience in handling your funds.

Effective Ways to Build an Emergency Fund

  • Set a Goal: The first step is to set a target amount for your emergency fund. A commonly recommended amount is to have enough to cover three to six months of living expenses. If your job is particularly unstable, or you have many dependents, you may want to aim for a larger fund.
  • Save Regularly: Make saving a part of your monthly budget. It is suggested to save at least 20% of your income. However, if setting aside 20% of your income is too much, you can always start with a smaller amount and increase it over time. The key is to be consistent and make saving a habit.
  • Automate Your Savings: To ensure that you can consistently set aside money, consider setting up an automatic transfer to your savings account each month.
  • Use a High-Interest Savings Account: Put your emergency fund in a high-interest savings account to make your money work for you. This way, your emergency fund grows over time even without additional contributions.
  • Cut Down on Unnecessary Expenses: Examine your monthly spending and identify areas where you can reduce expenses. Cutting down on luxury items or non-essentials can help you save more money.
  • Save Unexpected Income: If you receive an unexpected income such as bonuses, tax refunds, or gifts, consider saving them instead of spending them.
  • Invest Wisely: While your emergency fund needs to be liquid and easily accessible, once you have a sizable amount, you may consider investing a portion in low-risk investments to generate more income. Be cautious and ensure you understand the risks before investing.
  • Keep It Liquid: Your emergency fund should be in a form that’s easily accessible. The aim is to have it available when you need it. It’s generally advisable to avoid investing this money in assets like real estate, which can’t be quickly liquidated.

See also: Best Savings Account in Singapore without Salary Credit and Best Saving Account Singapore


1. How Much Should My Emergency Fund Be in Singapore?

Financial experts typically suggest keeping 3 to 6 months’ worth of living expenses as an emergency fund. This is generally considered a healthy safety net to help cover unexpected costs, such as job loss, medical emergencies, major home repairs, or any other unforeseen expenses.

However, the exact amount that you should save can depend on your personal circumstances. For instance, if you don’t have a stable job or your income is based on commissions, you might want to consider saving more. On the other hand, if you have other resources you can draw on in an emergency, you might need less.

When figuring out how much you should set aside for your emergency fund, consider these factors:

  • Housing (rent or mortgage payments)
  • Utilities
  • Transportation costs
  • Food
  • Insurance premiums
  • And other recurring costs

Remember that the purpose of an emergency fund is to cover unexpected expenses without the need to take on high-interest debt. Your emergency fund should be easily accessible, such as in a high interest savings account.

2. Where Is the Best Place To Put an Emergency Fund in Singapore?

When deciding where to place your emergency fund, the most important factor is liquidity – you should be able to access your money quickly and without penalties when an emergency arises. It’s also important to preserve the capital, meaning it should be placed in a low-risk account or instrument. Interest rates, while usually a key consideration for investments, are less important for emergency funds.

Here are a few places where you can keep your emergency fund in Singapore:

  • High-Interest Savings Accounts

High-yield savings accounts generally provide higher interest rates than regular savings accounts. Banks in Singapore such as OCBC, UOB, and DBS offer savings accounts with interest rates that can be boosted by fulfilling certain criteria, such as crediting your salary, spending on a credit card from the same bank, or investing through the bank. These accounts provide immediate access to your emergency savings.

  • Singapore Savings Bond (SSB)

SSBs are a safe investment option as they are fully backed by the Singapore government. They provide a modest but reliable return and can be redeemed at any time with no penalty, providing both accessibility and a reasonable return. Their returns are linked to long-term Singapore Government Securities rates.

  • Insurance Savings Plans 

Insurance savings plans are offered by insurance companies and can be used to accumulate savings over time while providing a death benefit. The downside? You might not be able to withdraw your funds at any time since there is a lock-in period. However, there are some insurance savings plans that allow you to withdraw up to 10% of your single premium without any penalty in your first year.

  • Cash Management Accounts

These are relatively new offerings by Robo-Advisors and brokerage firms in Singapore. They typically invest in low-risk money market funds and short-term bond funds, aiming to provide a return higher than a typical savings account while maintaining high liquidity. 

Examples include StashAway Simple, Endowus Cash Smart, and Syfe Cash+. These accounts can offer daily access to your funds and do not typically have lock-in periods, making them a potentially good option for holding an emergency fund. However, unlike a savings account, the principal value in a cash management account can fluctuate, albeit minimally.

3. Is $10,000 Good for an Emergency Fund?

Whether SGD $10,000 is a sufficient amount for an emergency fund in Singapore depends on your personal circumstances, specifically your monthly living expenses. 

If your monthly expenses total SGD $2,000, for example, an SGD $10,000 emergency fund would cover about 5 months of living expenses. This would be considered a solid emergency fund. However, if your monthly expenses are higher, say SGD $3,500, an SGD $10,000 emergency fund would only cover about 3 months of expenses.

Consider this tip: If your job is stable and your total monthly expenses are low (say around 30% of your household monthly income), or if you have multiple sources of income, you can afford to maintain a smaller amount of funds. But if your income varies or your expenses are high or if you only have a single source of income, then you might want to aim for a larger fund.

4. Is $30,000 a Good Emergency Fund?

Let’s assume that your monthly expenses amount to SGD $5,000, then SGD $30,000 would cover about 6 months’ worth of expenses, which is generally considered a good safety net. If your monthly expenses are significantly less than that, say SGD $2,000, then SGD $30,000 may be more than you need in an emergency fund.

Consider factors such as:

  • The stability of your income: If your income is unstable or variable, you might want to have a larger emergency fund.
  • Your financial obligations: If you have a lot of financial obligations, such as a mortgage or dependents, a larger emergency fund can provide extra security.
  • Your health situation: If you have health problems that could lead to large, unexpected medical bills, a larger emergency fund would be a good idea.


Establishing an emergency fund is a fundamental step towards achieving financial stability. It’s a lifeline that can tide you over during times of financial stress, shielding you from debt and affording you peace of mind. 

Key takeaways

  • The rule of thumb is to set aside money with 6 months worth of your monthly expenses.
  • After making financial goals and plotting your plans in the next months or years, the next task is to identify a financial institution that could hold your emergency for you. 
  • You would also want to keep your funds to an institution with high-interest rates, plus, you should be able to access your money quickly and without penalties when an emergency arises.

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