How much should you save for your emergency fund? Life brings happier moments and harder ones. It pays to be well prepared, especially for the harder ones. The ideal size of your reserve is individual. It depends on your income and on your personal needs. Have you ever thought about the right amount to set aside each month?
What Is Meant by an Emergency Fund?
An emergency fund is a sum of money that a saver regularly sets aside. It can come from employment income, business income, casual work, rental income, an inheritance or a gift. Its purpose is to cover unexpected household expenses (an underpayment on an electricity bill, buying a new appliance, an urgent car repair and more).
An emergency fund is now an essential financial tool that helps prevent unnecessary debt for a household or an individual, or their fall into a debt trap. If you use up your emergency fund, you need to review your household budget and actively rebuild the fund.
What Is the Optimal Personal Emergency Fund?
Financial analysts generally agree that your emergency fund should total around six months of salary. How do you compare? Is saving a priority for you?
A recent survey by Raiffeissen Bank carried out by the Instant Research platform found that Czechs set aside about 1,000 CZK (about 46 USD) to 3,000 CZK (about 140 USD) a month. Setting aside larger amounts tends to be easier for more qualified employees with higher incomes.
Lower income means a greater need to build a reserve. This group is more exposed to the debt spiral. Building a reserve takes them longer and more effort, but it brings more calm and stability into their lives.
We can classify an emergency fund by how quickly it is available. We distinguish:
- An operational reserve.
- A short-term reserve.
- A medium-term reserve.
- A long-term reserve.
Operational vs Long-Term Emergency Fund
An operational reserve is money that is available to you almost immediately. It lets you deal with a situation right away. This means funds in a current or savings account, term deposits (with a fixed-rate period, fixace, of up to 3 months), cash.
A long-term reserve means funds placed in a supplementary pension savings (doplňkové penzijní spoření, DPS) account (part of the funds can be withdrawn if specific conditions are met), life insurance, or direct investment in shares.
The purpose of a long-term reserve is more about securing funds for retirement or pre-retirement age. We build this type of reserve over a longer time horizon, and by choosing the right investment strategy we have a real chance to influence the final amount saved.
💡Tip: Also check out the article: How to Grow Your Money Safely?
How to Build a Short-Term Reserve?
A short-term reserve means funds held in term deposits with a fixed-rate period (fixace) of 3 to 12 months, investments in money market funds, purchases of short-term bonds, or precious metals.
Building savings (stavební spoření) can also count as a short-term reserve if the client has already been saving for more than six years. Once the tie-in period is met, the building savings plan can be terminated at any time and the saved funds released within one to three months, depending on the terms of the particular building society.
Emergency Fund for a Mortgage
Buying a property is the dream of many young people, but the path to it keeps getting harder. Many of us see owning a home as the way to a calmer, happier life. No more moving for cheaper rent. You can furnish and fit out a newly bought flat exactly as you like. But there is always a catch.
Financial institutions require your own savings. Ideally at least 10%. Offering 100% mortgages becomes a risky business for a bank, which is also reflected in interest rates. There is no way around it. If you are considering your own home financed with a mortgage, you must show sufficient income, an emergency fund and also collateral.
How to Save Money Sensibly?
First, draw up a realistic budget and work out what expenses you are dealing with. In the next step, think about optimising it. Consider which expenses could be reduced.
How do you find ways to cut your expenses? One way is switching your current energy or telecoms provider. Replacing energy-hungry household appliances also shows up on your final bill.
Another option is cutting unnecessary spending. This step can be painful for some of us, but it has to be done. Branded clothes can be set aside for a while and replaced with cheaper ones. Fashion trends keep changing, so why not bet on timeless style instead.
If your financial situation gets worse because you lose your job or your income drops, it is better not to take on debt. The only reasonable and justified debt is a mortgage. Treat yourself to a foreign holiday only once your financial situation improves.
💡Tip: Also read the article: What Is the Ideal Household Emergency Fund?
Simple Tips for Building an Emergency Fund
- Make building an emergency fund your priority goal and work out your plan for reaching it. Feel free to write it all down on paper or on your computer. Try to stick to the plan and keep checking whether you are meeting your goals.
- After you receive your salary or business income, draw up a balance of your income and expenses. Include a category for unexpected expenses too. Then assess whether your financial situation allows you to build a reserve or not. If the result is a positive balance, keep checking that your actual spending matches the plan. If not, consider casual work, overtime or another source of income.
- Try to save at least a small part of your monthly income every month (ideally at least 10%) and grow it a little using a safe financial product (a savings account, building savings, a term deposit).
- Cut back on unplanned spending. If a friend cancels on a planned sports outing, try to set the money you saved aside. Remember that this will give you great experiences in the future and will not derail your priority goal of actively building an emergency fund.
Try to see building your personal emergency fund as something positive, not as a necessary evil. A responsible approach to managing your money opens the way to a fuller, more satisfying life. A well-set-up emergency fund lets you pursue your dreams and, at the same time, protects you, at least in part, during harder times.
USD amounts are approximate, converted at the Czech National Bank rate of 21.80 CZK per USD on 2 October 2026.
