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How can a Savings Account help build an emergency fund?

05 Aug 2025 by Team FinFIRST

How to Build Emergency Funds with Savings Account

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We’ve all had moments when life throws a financial curveball - an unexpected medical bill, sudden car trouble or a gap between jobs. These moments can be stressful and difficult to manage, especially if you're unprepared. That’s where having a financial safety net makes all the difference.

A financial safety net is money set aside to protect you during life’s unexpected challenges. At the heart of this safety net is your emergency fund - a dedicated reserve designed specifically to help you cover unforeseen expenses without derailing your financial goals or going into debt.

The good news? Building your financial safety net isn’t complicated. With the right savings account, like the one offered by IDFC FIRST Bank, you can start securing your financial future today.

Let’s explore how to build your safety net, starting with an emergency fund.

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How to build a financial safety net with an emergency fund

A simple and effective way to create your safety net is by opening a dedicated savings account and consistently setting aside money into it. Here’s how to do it.

1. Open a dedicated emergency fund account

Keep your emergency fund separate from your everyday funds to avoid accidental spending. An excellent choice for this is the IDFC FIRST Bank Savings Account, offering:

Up to 7% p.a. interest, helping your funds grow faster
Zero charges on all savings account services
A user-friendly digital platform for easy access and management

2. Automate your savings

Build your emergency fund effortlessly by following these tips:

Set up automatic transfers from your main account to your emergency fund account on payday
Treat these transfers like a non-negotiable monthly expense

This simple habit ensures your financial safety net grows steadily.

3. Monitor and manage your cash flow

Use your savings account’s features to:

Track deposits and withdrawals
Adjust spending habits to free up extra savings
Deposit bonuses, gifts or tax refunds directly into your emergency fund

Smart money habits: Cut expenses and follow money-saving tips

A strong safety net isn’t just about saving more - it’s about spending wisely. This is where adopting reliable money-saving tips can make a real difference:

Track expenses to know where every Rupee goes
Set a monthly budget and stick to it
Save before you spend
Review subscriptions and cancel what you don’t use
Cut back on takeaways and deliveries
Use cashback and rewards to maximise every transaction
Cut down on impulse buys and non-essential purchases
Try to save on groceries and essentials
Plan no-spend days to challenge yourself weekly
Use public transport or carpool
Shop during sales and buy only what you need
Negotiate bills to lower phone, internet, or rent costs
Set clear financial goals since saving is easier with a purpose

Even small adjustments can make a big difference over time.

What about sinking funds?

While your emergency fund is for unforeseen expenses, it’s also smart to set up sinking funds - dedicated savings for planned or predictable costs.

Think annual insurance premiums, home maintenance, festive gifts or a future holiday. By setting aside a small amount regularly in advance, you avoid disrupting your emergency fund or taking on debt when these expenses arrive.

You can create multiple sinking funds within your savings account or track them digitally to stay organised. It’s another practical approach when planning how to manage money better and reduce financial stress.

Why a financial safety net matters

Building a financial safety net isn’t optional - it’s essential. Here’s why:

Protects your financial stability during emergencies
Prevents debt by reducing the need for high-interest loans or credit cards
Provides peace of mind, letting you focus on life without financial worry
Supports smarter investment decisions, knowing you have a backup fund in place

How much should you save in your emergency fund?

A good rule of thumb is to save three to six months’ worth of essential expenses. For example, if your monthly expenses are ₹50,000, your emergency fund should hold ₹1.5–3 lakhs.

Adjust this amount based on your job stability, dependencies, and financial responsibilities.

Why choose IDFC FIRST Bank for your financial safety net?

With competitive interest rates, zero fees on all savings account services, and seamless digital banking, IDFC FIRST Bank makes it simple to build and manage your emergency fund. Key benefits include:

Up to 7% p.a. interest on your savings, calculated daily and credited monthly
Zero fees on essential services
Unlimited ATM withdrawals
User-friendly mobile and internet banking
24X7 customer support via phone and WhatsApp
Recognised among the World’s Best Banks 2025 by Forbes in partnership with Statista

Whether you need financial help during an emergency or are planning for your future, a strong emergency fund gives you the flexibility and peace of mind to stay in control.

Secure your future today

A financial safety net isn’t a luxury - it’s a necessity. Start building yours today with a dedicated emergency fund and give yourself the freedom to face life’s surprises with confidence.

Open your IDFC FIRST Bank Savings Account now and take your first step toward lasting financial security.

Frequently Asked Questions

Can I use my emergency fund for planned expenses?

No. An emergency fund should be reserved strictly for unforeseen, urgent expenses and not for planned or discretionary spending.

What if I don’t have a steady income? How do I save for an emergency fund?

Start by saving small, manageable amounts whenever possible. Prioritise building your emergency fund even with irregular income by automating savings when cash is available.

Should I invest my emergency fund to earn higher returns?

No. Your emergency fund should be liquid and easily accessible. Investing it in volatile instruments risks losing access to funds when you need them most.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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