So-called “precautionary” savings, an “emergency fund” or even a “safety cushion”… they are all the same thing: it is the reserve of money that allows you to face hard knocks and sudden or unforeseen life changes. The term “emergency fund” may seem a little anxiety-inducing… but on the contrary. Building up savings “just in case” can be very reassuring and allow you to move forward with more peace of mind. We’re going to take a look at the questions people most often ask when they hear about emergency funds.
What is an emergency fund?
An emergency fund is a reserve of money you set aside to handle unexpected events. Regardless of how often or how much you save, the idea is to anticipate life’s hard knocks as much as possible, times of strain on your and your family’s budget, or even crises. This necessarily involves imagining unpleasant scenarios (the car breaks down, you have to buy a new boiler, etc.), or even slightly distressing ones (sudden loss of income, accident, etc.). But having a fund of money to handle emergencies means that when you’re up against the wall, you don’t have to worry (or worry less) about money. By regularly putting money aside, you gain comfort in case of a problem. You can also, if it hasn’t been used at the end of each year, take this budget and devote it to pleasant things or to the completion of a specific project.
When should you use your emergency savings?
It’s up to you to determine the circumstances under which it’s “acceptable” to dip into your emergency fund. Because every situation is different. But it’s almost certain that replacing a decorative item or buying a pair of shoes you don’t need isn’t really a good use of emergency savings. Mind you, this doesn’t mean that taking money from the emergency fund to buy the kids a Christmas or birthday present is a bad idea: again, some occasions are important to you, and especially crucial to the kids. That’s why it’s helpful, when you start building an emergency fund, to think about what constitutes a priority. There’s “emergency” and “emergency.” The car breaks down and you can’t get to work: that’s an emergency. You want a better phone, but the current one still works: that’s not an emergency. Set some rules, so to speak. This will make it easier to decide later.
How much should you put in your emergency fund?
The “minimum” amount you should have for an emergency fund will vary depending on several criteria. Your family, geographic, and professional situation… Depending on whether you own or rent, whether you live in a big city or a more rural setting, whether you have a permanent contract or are on assignment… It’s generally estimated that an emergency fund should be worth 2 to 3 months of salary, or 3 to 6 months of expenses (which isn’t quite the same). Of course, if you have the opportunity to save more, you can take it. But we’re talking about a floor here. This can be a large amount to save, as your financial situation may be such that even with a decent salary, your monthly living expenses are very low. To start, try setting aside a €500 emergency fund. And to reach this goal, every little helps. Don’t neglect small savings: €500 a year is less than €10 to put aside each week.
What is an emergency fund for?
In addition to the comfort that knowing you have enough money set aside to face hard times can bring you, having emergency savings also allows you to: Not to borrow money from relatives Avoid loans such as salary advances or borrowing from credit institutions, which tend to trigger a vicious circle To avoid having to drastically and abruptly change your lifestyle Not having to manage the emergency via an overdraft with your bank which will not be free (bank charges)
How to save for your emergency fund?
There’s no magic formula, unfortunately! You’ll have to put money aside. To save and build up an emergency fund, you can follow the same tips as for optimizing budget management :
- Start by laying out your monthly charges and expense items
- Rationalize by identifying necessary expenses and those that can be avoided
- Limit “avoidable” spending items and put that money aside
Better managing your budget will help you avoid bank overdrafts, which is already a very positive thing in itself. But it will also allow you to free up money each month to build up your savings, first “emergency” savings, then savings specifically for specific projects for you and your family. Indeed, even if it can be frustrating, the emergency fund must come before the vacation budget or even the real estate project. “Emergency” means “priority.”
Where should I put my emergency fund money?
If this option is open to you, the ideal is to build your emergency fund in a regulated savings account, such as the Livret A or the Livret d’Épargne Populaire. Rates change often, but they have been quite attractive recently. And a regulated savings account is a secure banking product. Be careful, these are savings accounts where the money will be available at any time, because the goal is precisely to be able to access it when needed. By opting for this type of account, you will pay a few management fees (few transactions, a few withdrawals).
How to manage an emergency fund?
The principle is to use the fund if necessary, and to replenish these savings as soon as possible. For example, if you need to spend €400 to repair the boiler this winter, then put €400 back into the emergency savings as soon as you can. Freeing up this €400 to replenish your emergency fund becomes a priority.
How do the French save?
When we look at how French couples, both men and women, save, we see that regulated savings are one of the most widespread investments. Livret A, LDD, LEP, PEL, CEL, Livret Jeune… In the second quarter of 2023, so-called “regulated” savings represented 915 billion euros. On average, note also that an adult saves €4,800 per year. If you are a young man or woman and you are far from this goal, do not panic. On the one hand, we save less when we are young (less than 1/10th of our resources before 30 years old). On the other hand, this national average also includes households with very high incomes, for whom it is much easier to save. Focus on your goals, and decide on an emergency fund commensurate with your standard of living.
Can I build an emergency fund with savings accounts or variable-rate banking products?
It is strongly recommended not to invest money in unstable banking products, such as variable-rate savings accounts, savings accounts not regulated by the State, or, of course, anything related to stock market speculation. Be particularly wary of “investment opportunities” that you find on the Internet. If you struggle to put aside money to manage emergencies, taking a chance is unwise. Online scams are widespread, and sometimes even carried out by your favorite influencers. Choose safety. Putting the financial security of your couple or your family at risk is too risky.
What about social assistance?
It is very common for households in the French population (couples and families) not to receive the aid to which they are entitled. Each year, nearly 10 billion euros are not claimed from the State. Why? Often, because people are not aware that they are entitled to this or that aid. The procedures can also be (or appear to be) too complex. Finally, there is a reluctance on the part of the French population: we do not want to depend on social aid. But the idea that people are “taking advantage” is wrong. In particular, there is a tendency to think that young men and women choose to “abuse the system” by receiving a lot of benefits, which is statistically inaccurate. In France, those over 60 receive the most social benefits (44.2% in 2025). While 34% of households, often younger, who could receive the RSA do not claim it (2018 figures). But as soon as you work and are declared, you contribute to social assistance: that’s what the deductions from your salary are for. If you receive assistance for which you have contributed, you are not “benefiting” from the system: it is simply working as it should. We talk to you in more detail about assistance for people in financial difficulty here.
When should I put money into my emergency fund?
Each month, once the essential expenses have been paid (rent, electricity, water, gas, etc.) and the food budget established, organize a payment into your emergency fund. You can also set up an automatic transfer that will go from your checking account to your savings account each month, within a few days of your paycheck if it is paid to you regularly.
How to set up your emergency fund with NIRIO?
Don’t overlook the tailor-made tools designed to help you save and better manage your budget. Nirio’s budget management app, for example, is designed to help you have a clear overview of your budget, manage shared expenses, and gradually put money aside. With its app, its human interlocutors who help you in 10,000 points of contac,t ad, its advice (for exampl , here with challenges to test to save money ), Nirio can give you the right tools to build an emergency fund.
