30th April 2025 - 5 min read

Unexpected expenses are a part of life, but managing them can be a challenge, especially when you’re not prepared. Many Malaysians face difficulty in setting aside enough savings to cover such costs. According to the RinggitPlus Financial Literacy Survey 2024, only 33% of Malaysians manage to save RM500 or more each month. This means that when unexpected financial burdens arise, a significant portion of the population may find it difficult to respond effectively.
One of the best ways to protect yourself from such situations is to build an emergency fund.
An emergency fund is a savings reserve specifically set aside to cover unexpected costs like medical expenses, car repairs, or urgent home maintenance. Think of it as your financial safety net—designed to help you weather life’s surprises without having to rely on credit cards, loans, or borrowing from family and friends.
Without an emergency fund, you may find yourself facing long-term financial stress. Having this fund in place provides peace of mind, ensuring you can handle unexpected situations without derailing your day-to-day living or your long-term financial goals.
In fact, recent findings highlight how unprepared many Malaysians are for such unforeseen circumstances. For example, the RinggitPlus Malaysian Financial Literacy Survey 2024 also found that 38% of respondents indicated they could manage for just three months or less, while only 18% believed they could last for over six months. These figures underscore the importance of building a financial cushion that can help you navigate life’s unexpected challenges with greater ease.

Now that we’ve discussed why an emergency fund is essential, let’s dive into practical steps to help you start building one. It’s natural to feel overwhelmed, but taking small, consistent actions can lead to meaningful progress.
1. Start With A Small Goal
You don’t need to save a large sum immediately. Start by aiming for a small, achievable target, like RM500. Once you hit that milestone, set a higher goal and gradually build your fund.
Just as important, take time to track where your money goes. Understanding your spending habits is the first step toward cutting back and creating a positive cash flow. With more control over your finances, setting money aside becomes much easier and more sustainable.
2. Automate Your Savings
Set up automatic transfers to a savings account each month. That way, you don’t have to think about it. Your savings will grow steadily without needing to take action every time.
Unsure of where to start? Try the 50/30/20 rule. Allocate 50% of your income to needs, 30% to wants, and 20% to savings or debt. You can adjust the percentages to fit your situation — even a small amount is a good start.
Also, consider using a savings account without a debit card. With fewer ways to access the money, you’ll be less likely to withdraw it for non-emergencies.
3. Cut Back On Non-Essential Spending
Look at areas in your budget where you can reduce spending, like dining out, subscriptions, or impulse purchases. Direct that extra money toward your emergency fund until you’ve reached your goal.
A helpful habit is to clearly separate your needs from your wants. This makes it easier to identify where you can cut back without feeling deprived. Even small changes, like cooking at home more often or pausing a few services, can help free up money for savings.
4. Use Windfalls Wisely
If you receive extra income, like a tax refund, bonus, or gifts, put a portion into your emergency fund. These windfalls can give your savings a much-needed boost without affecting your regular budget.
If you’re following the 50/30/20 rule, apply the same approach to windfalls. For example, allocate 20% of any extra income to savings, specifically for your emergency fund. This way, you’re growing your fund while keeping balance with your other financial goals.
5. Review Your Progress Regularly
Keep track of your savings to stay motivated. Celebrate small milestones, and if necessary, adjust your savings goal as your circumstances change. Consistency is key!
Even with the best intentions, building an emergency fund can take time. If an unexpected expense arises before you’ve had the chance to fully save, there are short-term financial solutions that can help bridge the gap.
Products like GXBank’s FlexiCredit offer flexible access to funds when you need them most. While building your emergency fund remains the goal, having such options available can provide temporary relief in difficult situations. Learn more about GXBank’s FlexiCredit here.
Take our Financial Resilience Quiz to find out how well-equipped you are to handle financial surprises. It’s quick and easy, and the results will give you personalised insights into your financial readiness.
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Comments (2)
37.1%… now how do i sign up for a financial plan?
You can visit our website for more details or reach out to our team at can@RinggitPlus.com, and we’d be happy to assist you in finding a plan that suits your needs.