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How to Build an Emergency Fund in the Philippines 2024

Last updated: April 11, 2024
Written by: Digido Financial Writers Team | Reviewed by: Anna Kireeva

Key takeaways:

  • An emergency fund is your financial tool to handle uncertainty.
  • But what’s if you don’t have any savings?
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emergency fund philippines

Most Filipinos face difficulties in budgeting. They prioritize expenses over savings. It’s only natural, as we all love to pamper ourselves and often make spontaneous purchases. So, when an emergency occurs, they don’t have money to finance the expenditures.

No matter what emergency occurs, it is vital to have financial plans. And having an emergency fund should be the first thing to prioritize as it serves as the backbone of your personal finances. It must be very familiar to you, and you probably have the idea of its importance. But what is an emergency fund, really?

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What Is an Emergency Fund

The emergency fund is the readily available cash that can help you operate despite financial problems. It serves as your source of money when you face an unexpected financial dilemma such as losing a job.

The purpose of the emergency fund is to provide financial security in case of unforeseen circumstances.

People often live within the extent of their pay, not having financial plans when contingencies come. They focus only on their daily expenditures. Their reason is they earn very minimally to allocate for savings. The emergency fund can be synonymous with savings.

But what is the difference between savings and emergency funds?

The emergency funds do not focus on certain life goals like what other savings do. Some people know a little about budgeting, so they put all their savings on a certain financial goal alone. It is good to have savings. But having savings with a goal of buying something in the future will not make you financially independent.

The emergency fund is your savings for the unexpected financial crisis. That is why it is important to understand that the emergency fund is for uncertainties only. Generally, an emergency fund depends on your income, lifestyle, and necessary expenses. You don’t have to earn a lot to include it in your budget. Discipline and consistency are the essential keys in allocating for an emergency fund.

emergency fund

How do I Create an Emergency Fund

Below are simple steps you can use to effectively create an emergency fund. If you understand its importance, it will be easy for you to follow a guideline:

📌 Make your budget

When making a budget, it’s important to start by identifying your expenses to distinguish between essential (necessary for basic living) and non-essential (optional or discretionary) spending. This can typically be done by reviewing your credit card and bank statements.

Once you’ve classified your expenses, calculate the sum of your essential expenses to understand your monthly necessary spending
This total is crucial for determining the size of your emergency fund, which is a reserve of money meant to cover unexpected expenses.

The recommendation for an emergency fund is to have savings equivalent to 3 to 6 months of your essential monthly expenses. This fund should be separate from other savings or investment accounts and easily accessible in case of emergencies.

📌 Avoid unnecessary spending

Discipline comes at this part. Along the journey of saving up for an emergency fund, you will encounter some temptations. It may be a discount sale on your favorite boutique or food cravings that you can cook at home. Whatever it is, you need to resist the temptation of spending too much by following your budget plan.

Additionally, determine if you have recurring expenses such as subscription or membership that you do not basically need. Canceling these costs will help you save more for your emergency fund.

📌 Pay yourself first

Make your emergency fund the top priority over your optional expenses. Most Filipinos fail in this area. Thus, many still struggle with having enough savings.

What is an Emergency Fund

📌 Increase your earnings

Most Filipinos reason out that they can’t allocate a budget for savings. They often say that their earnings are not enough even to cover up all necessary expenses. If you have the same struggle, the best way is to increase your earning capacity. Nowadays, there are a lot of means to earn more than your monthly salary. Get a side hustle or have some form of passive income. For example:

  • Freelance Work: Offer your skills online, such as writing, graphic design, or programming, on platforms like Upwork or Freelancer.
  • Online Tutoring: Teach English or other subjects to students locally or internationally through platforms like VIPKid or Tutor.com.
  • E-commerce: Sell products online through platforms like Lazada, Shopee, or your own e-commerce website.
  • Food Delivery or Ride-Hailing Services: Work as a part-time driver for services like Grab or Foodpanda.
  • Rental Income: Rent out property or rooms through Airbnb, especially if you’re in a tourist-friendly location or near business districts.

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25 Best Side Hustles in the Philippines 2024

📌 Create rules when to use your emergency fund.

In this part, you can create a list of events that will force you to use your funds. Make sure that these are adequate to consider an emergency. It can be losing a job, medical emergencies, unexpected house repairs, or natural calamities. And of course, always replenish it whenever possible.

📌 Choose where to keep your emergency fund

Another thing that you need to know is where you should keep your funds. You should put your emergency fund somewhere that you could easily reach. Of course, do not place it under your mattress.

Typically, people keep their emergency funds in the bank, where they can instantly withdraw their money. However, it is also better to put it in a separate account from the accounts you use for paying bills. Financial advisors often suggest that you should put your emergency fund in high-yield savings from your bank. In the next chapter, we’ll talk about where to put your emergency funds and the best places to consider.

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where to put emergency fund Philippines

Where to Put an Emergency Fund in the Philippines

As mentioned above, the better place to put your emergency fund is somewhere you can easily withdraw. Many people wonder where to put the emergency fund in the Philippines. In choosing a facility for your funds, ensure that it is:

  • Safe from market risks
  • Easy to access and always available
  • Income earning

It’s also wise to keep an eye on the inflation rate to ensure your emergency fund does not lose value over time. Remember, the primary purpose of an emergency fund is liquidity and safety, not high returns, so choose options that align with these goals.

Typically, the best place to put your emergency fund is in a savings account or a money market fund. Here are some of the best places to consider for your emergency fund:

👉 High-Yield Savings Accounts

Many banks in the Philippines offer high-yield savings accounts with higher interest rates compared to regular savings accounts. These accounts are perfect for emergency funds as they provide easy access to your money while earning more interest.

👉 The Savings Account

Savings account in a bank is the first option to put in the emergency fund. Aside from the fact that you can easily withdraw your funds from the bank, it is safe from the risks of the market. You can also earn passively through its interest rates.
The interest rates vary on each bank. So, before opening an account, it is better to search for the best bank that suits your goals and priorities.

emergency fund how much

👉 Digital Banks

Several digital banks in the Philippines offer competitive interest rates on savings accounts. Digital banks often have lower operating costs than traditional banks, allowing them to offer higher yields. Plus, your funds are typically easily accessible through online transactions

👉 The Money Market Fund

If you already have enough funds for any contingencies, you may want to check the money market funds. Money market funds are securities sold in retail to the investing public. They are interest-bearing instruments that pay interest at a periodic interval. Typically, they mature within a year.

Money market funds are relatively low risk and offer better returns than traditional savings accounts. They also provide liquidity, allowing you to withdraw your money when needed.

When selecting the best money market fund, look for a fund that:

  • Does not have any sales load;
  • Has a low management fee;
  • Has no holding period.

👉 Short-term Government Securities

Investing in short-term government securities, like Treasury bills, is another low-risk option. These are debt instruments issued by the Philippine government, offering guaranteed returns upon maturity. They are considered safe investments since they are backed by the government.

👉 Time Deposits with Early Withdrawal Features

Some time deposits offer relatively higher interest rates than savings accounts and may come with features that allow for early withdrawal without significant penalties. This can be a good option for those who want a slightly higher return on their emergency funds but still need some level of access to their money.

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Emergency fund: How much in the Philippines

The recommended amount to save in an emergency fund typically ranges from three to six months’ worth of living expenses. This guideline is designed to cover unforeseen circumstances such as job loss, medical emergencies, or urgent home repairs without the need to incur debt. The exact amount, however, can vary based on several factors:

The recommended amount to save in an emergency fund typically ranges from three to six months’ worth of living expenses. This guideline is designed to cover unforeseen circumstances such as job loss, medical emergencies, or urgent home repairs without the need to incur debt. The exact amount, however, can vary based on several factors:

  • Job Stability: If your job or income is unpredictable, leaning towards six months or even more can provide additional security.
  • Number of Income Earners: For households with more than one income earner, you might be able to aim for the lower end of the spectrum since you have multiple sources of income.
  • Fixed vs. Variable Expenses: Evaluate your fixed expenses (those you must pay, like rent and utilities) and variable expenses (those you can adjust, like dining out). Your emergency fund should primarily cover the fixed expenses, but having extra to cover some variable expenses can offer more comfort.
  • Dependents: If you have dependents, such as children or elderly family members, your emergency fund should be larger to cover the additional costs that could arise from unexpected events.

Ultimately, while three to six months is a standard recommendation, your specific circumstances—such as risk tolerance, financial obligations, and lifestyle—should guide your final decision. It’s also worth noting that having any amount saved is better than none, so start with a smaller, achievable goal if necessary and build from there.

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How Can an Emergency Fund Help Me

Clearly, an emergency fund is your financial tool to handle uncertainty. It will give you peace of mind whenever a financial catastrophe occurs.
For Filipinos, both personal financial emergencies and natural disasters are common considerations due to the Philippines’ geographic and economic landscape. Here are several examples of emergency situations that might necessitate tapping into an emergency fund:

  1. Natural Disasters: The Philippines is prone to natural disasters like typhoons, earthquakes, and volcanic eruptions. These can cause significant damage to property and livelihood, requiring funds for repairs, relocation, or to cover living expenses during recovery periods.
  2. Medical Emergencies: Unexpected health issues or accidents that lead to hospitalization, treatment, or medical procedures can be costly, especially if not fully covered by health insurance.
  3. Job Loss: Sudden unemployment can disrupt income flow, making it difficult to cover daily living expenses and bills until new employment is found.
  4. Family Emergencies: These might include urgent support for family members who are in distress, such as financial assistance for relatives affected by unforeseen events or crises.
  5. Home Repairs: Urgent repairs may be needed for your home due to wear and tear or as a result of natural calamities, such as fixing a leaking roof, plumbing issues, or electrical problems.
  6. Vehicle Repairs: For those who rely on their vehicle for commuting or business, unexpected repairs can be crucial and costly.
  7. Educational Emergencies: Sudden expenses related to education, such as additional school fees, materials, or the need to purchase a computer for online learning.
  8. Repatriation Needs: For OFWs (Overseas Filipino Workers), emergency situations might require an immediate return to the Philippines, necessitating funds for travel and living expenses until they can secure employment at home.

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Where to Get Money Without an Emergency Fund

Life is full of surprises. Unfortunately, not all surprises mean good things. Many Filipinos are still living with an average income. And admittedly, most of them have no savings at all. If you are experiencing the same thing, life must be harder for you during difficult times. Saving up for an emergency fund is the last thing you would probably ever do with your earnings.

But what’s worse is when you are having financial troubles, and another unforeseen financial catastrophe is coming your way. You don’t have any savings. What to do now? Fret not. For every problem, there is always a solution.

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Digido is a legitimate online company that gives fast loans to Filipinos. With Digido, you can get money and cover your emergency expenses even if you don’t have any savings.

Digido offers loans online with great convenience – you don’t even have to leave your house. Within only 4 minutes, you can receive up to PHP 25,000 on your bank account. You can apply with only one Valid ID and Get an Emergency Loan without delay. Digido does not require a guarantor, documentation, or guarantee deposit for you to get a quick cash loan. Additionally, the service is fully automated.

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How to Increase and Maintain your Emergency Fund

Growing and maintaining your emergency fund involves a combination of consistent saving habits, strategic financial planning, and mindful spending. Here are some key steps to help you build and preserve your emergency fund:

Automatic Savings: Automate transfers to your emergency fund from your checking account to a separate savings account. This ensures you consistently contribute without having to think about it.

💰 Keep It Accessible but Separate: Your emergency fund should be easily accessible but kept separate from your regular checking or savings accounts to avoid temptation.

💰 Adjust for Changes in Expenses: As your living expenses change, adjust the size of your emergency fund accordingly. If your expenses increase, aim to grow your fund to maintain the three to six months’ expenses guideline.

💰 Review and Replenish: Regularly review your emergency fund. If you need to use it, prioritize replenishing it as soon as possible.

💰 Invest Wisely: Once you’ve reached your emergency fund goal, consider putting any additional savings into investments that may offer higher returns, keeping in mind the importance of maintaining liquidity for your emergency fund.

By following these steps, you can ensure that your emergency fund remains robust and capable of covering unexpected expenses, providing you with financial security and peace of mind.

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  • How much emergency fund should I have Philippines?
    The general rule of creating an emergency fund in the Philippines is to save the equivalent of your salary for three to six months.
  • Is emergency fund the same as savings?
    No, an emergency fund is specifically set aside for unexpected expenses, while savings can be for any purpose, like buying a house or going on vacation.
  • Who doesn't Need an Emergency Fund?
    Virtually everyone benefits from having an emergency fund as unexpected expenses can arise regardless of one's financial status. However, individuals with extremely high net worth, whose regular income and liquid assets are more than sufficient to cover any conceivable emergency expenses without impacting their financial stability, might not need an emergency fund in the traditional sense.
Disclaimer and Editor’s note


Digido Financial Writers Team is a team of experts in the field of finance and credit, specializing in writing articles for Digido blogs.
Anna Kireeva
Author pages:
Anna is a marketing communications professional who specializes in digital marketing strategies and long-form content.

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