With rising job losses, volatile prices, and a shaky economic outlook, Economics and Policy Editor at The Common Sense, Bheki Mahlobo, explains why every South African household must make building an emergency fund a top priority. Modest savings could potentially shield families from debt traps, job losses, or unexpected costs in a crisis-prone environment.

South African households are facing some of the most challenging financial headwinds in decades, and the value of building an emergency fund has never been clearer. Mahlobo points to the latest figures showing that over half of young people in the country are jobless, and overall unemployment is close to 33%. “With so many people living on the edge, a small cash buffer can mean the difference between staying afloat or falling into debt,” Mahlobo explains.

He notes that the country’s debt-to-GDP ratio has doubled in the past ten years, and millions of families saw their income collapse during the Covid-19 crisis. “Even modest savings, just enough to cover a few months’ essential expenses, can prevent a temporary setback from turning into long-term financial difficulties,” Mahlobo says. This is crucial as South African consumer inflation remains stubbornly high, with food and electricity costs rising faster than wages.

For many, saving is hard, but Mahlobo stresses that every household can start with small, regular contributions. “You don’t need a windfall. Setting aside even a tiny amount each month, before other spending, is the foundation of household financial resilience,” he says. Research shows that households with emergency savings are less likely to rely on expensive credit or face possible repossession of crucial assets if a breadwinner loses their job.

In a country where state relief is patchy and personal responsibility is often the only fallback, Mahlobo argues that emergency funds empower families to make choices, avoid predatory lenders, and survive the country’s cycles of crisis. “Financial security starts with habits at home,” he concludes.

Households who take charge of their own safety net are better placed to ride out economic shocks, while those who delay risk being left exposed when the next crisis hits.