How To Build A Health Emergency Fund

James is a hardworking schoolteacher who lives a simple life with his wife and two children.

Life was predictable; going to work, taking care of the home, managing daily expenses, until one evening when his wife suddenly collapsed with severe stomach pain.

With no money set aside for emergencies, James rushed from one relative to another, trying to borrow some money to get her admitted to the hospital.

By the time they raised the funds, they had lost precious hours, and the condition had worsened. She survived, but only barely.

James’s story isn’t rare. Many families face the same painful reality: a lack of preparedness for medical emergencies.

Unexpected medical issues can arise at any time.

Sudden illness, an accident, a necessary surgery, or the management of a chronic condition can result in a catastrophic hospital bill that not everyone is financially prepared to handle.

Situations like this depict where a health emergency fund becomes essential.

It provides a dedicated financial cushion to cover urgent, unplanned, and potentially expensive medical expenses.

Without this fund, individuals often resort to high-interest loans, credit card debt, or delayed treatment, which worsens health outcomes.

This article explains what a health emergency fund is, why you need it, how much to save, and the best ways to build one step-by-step, even if your income is limited.

What Is A Health Emergency Fund?

A health emergency fund is a separate pool of money saved specifically for medical emergencies. This is not general savings, nor is it meant to fund routine check-ups or non-essential procedures.

It serves as a financial safety net, providing immediate access to funds in the event of a health crisis.

Common Uses For A Health Emergency Fund:

• Emergency Room Visits: These are sudden, unplanned trips to the hospital for immediate medical attention due to serious or life-threatening conditions.

• Hospitalisation And Surgery: This involves being admitted to a hospital for treatment, which may include operations to address serious health problems.

• Ambulance Transportation: This refers to the urgent transfer of a patient to a medical facility using an ambulance, often at a high cost.

• Prescriptions Not Covered By Insurance: These are medications that you must pay for out of pocket because your health insurance does not include them.

• Specialist Consultations: These are appointments with medical experts, such as cardiologists or neurologists, often needed for complex conditions.

• Lab Tests And Imaging: Includes blood tests, X-rays, MRIs, and other diagnostic procedures to detect or monitor health issues.

• Urgent Dental Care: This refers to emergency dental treatments like tooth extractions or repairs due to severe pain or injury.

• Assistive Devices (like crutches, wheelchairs, etc.): These tools, prescribed by doctors, help patients move or function after injury or surgery.

Why You Need A Health Emergency Fund?

• 1. Health Crises Are Unpredictable

Illnesses and accidents rarely give advance notice. Having a dedicated fund ensures that you don’t waste time searching for money or delay care when urgent treatment is needed.

• Health Insurance Doesn’t Cover Everything

Even with a comprehensive health insurance plan, you may still need to cover deductibles, co-payments, out-of-network charges, or treatments not covered at all. An emergency fund fills these financial gaps.

• Out-Of-Pocket Costs Are Increasing

Healthcare costs continue to rise globally. A short hospital stay, minor surgery, or even a trip to the emergency room can cost thousands, depending on your location and coverage. Saving proactively protects your finances.

• Reduces Financial Stress

A health crisis is stressful enough. Worrying about how to pay for care only adds to that anxiety. A health emergency fund provides peace of mind, allowing you to focus on recovery instead of worrying about health bills.

• Cultural Norms And Family Responsibilities

In African communities, you’re not saving for yourself alone. Parents, cousins, and neighbours may all look to you in times of need. Having a health fund helps you help others without putting a strain on your finances.

How Much Should You Save In A Health Emergency Fund?

There is no one-size-fits-all amount when it comes to saving for health emergencies, especially across different households with varied incomes and access to care.

However, here are practical guidelines to help you set a personal target:

• Minimum Goal: Save enough to handle a basic medical emergency, such as a short hospital visit, treatment for malaria, or urgent medication. Ideally, aim for ₦50,000–₦200,000 or its equivalent as a base, but the actual target will dependwill depend on your location and access to healthcareaccess to healthcare.
• Moderate Goal: Aim to save enough to cover a more serious health issue like a minor surgery, extended hospital admission, or multiple doctor visits.
• Ideal Goal: If possible, build a fund that can cover at least 3 to 6 months of your typical health expenses, especially important if you have children, elderly parents, or a chronic condition.

Example: If your past medical emergency required transport to the hospital, overnight admission, tests, and medicine, use that total cost as a guide. Multiply that by 2 or 3 to set a safer savings goal. The more dependents or risks you carry, the more you should aim to save over time.

How To Build Your Health Emergency Fund Step By Step

Step 1: Open A Separate Account

Start by setting up a separate savings account just for this purpose. Keeping the fund in a different account prevents accidental spending and makes it easier to track progress. Look for:

• High-yield savings accounts (HYSA)
• Accounts with no monthly fees
• Limited access (no debit card if possible)

Step 2: Set A Monthly Or Weekly Contribution Goal

Use your income and expenses to determine how much you can comfortably set aside:

• Low-Income Earners: Save even ₦5,000–₦10,000 per week. Consistency matters more than the amount.
• Stable Income: Aim for 5–10% of your monthly earnings.
• Irregular Income: Save a percentage from each paycheck or major payment you receive.

Pro Tip: Automate your savings using bank tools or financial apps. Set a recurring transfer to happen right after payday.

Step 3: Budget For Savings Like A Bill

Treat your health emergency fund like a non-negotiable monthly expense.

Just as you wouldn’t skip your rent or utility payment, prioritise your emergency savings before discretionary spending.

Sample Monthly Saving Plan

Even modest amounts add up over time, especially if you build the habit and stay committed.

Step 4: Cut Unnecessary Daily Expenses

Common financial drainers include:

• Buying airtime/data daily instead of weekly/monthly bundles
• Impulse food purchases (e.g., suya, shawarma, snacks)
• Weekend hangouts or betting apps

Redirect that money to your fund instead.

Step 5: Replenish After Use

If you ever need to dip into your emergency fund for a medical expense, prioritise rebuilding it as soon as possible. Emergencies are unpredictable; you may need it again sooner than you think.

Step 6: Review And Adjust Your Fund Annually

As your personal or family situation changes—new job, new baby, chronic condition diagnosis—revisit your emergency fund goal.

Your ideal amount may increase depending on risk factors and responsibilities.

Optional: Pair With Health Insurance

Your health emergency fund works best in combination with suitable health insurance.

Insurance can be the primary shield, and your emergency fund can act as a backup. Your emergency fund can help you cover:

• Out-of-pocket maximums
• Treatments outside your policy
• Premiums during unemployment
• Unexpected health-related travel or lodging

Consider health insurance schemes like:

• NHIF (Kenya)
• NHIS (Nigeria)
• Mutuelles de santé (Rwanda)

Tools And Apps You Can Use To Manage Health Funds

How To Avoid Using The Fund For Non-Emergencies

To keep your health fund intact:

• Label the account clearly: “Health Emergency Only”
• Avoid linking it to any debit cards or payment platforms
• Do not use it for regular bills or vacations
• Build a separate general emergency fund for non-medical needs

Tips For Success

• Start Now: Don’t wait for the “perfect time”. Those small savings matter.
• Stay Disciplined: Avoid the temptation to use the fund for other expenses.
• Educate Your Family: Inform close family members about the fund’s existence and its purpose, especially if they are dependents.
• Celebrate Milestones: Every ₦10,000 or ₦50,000 saved is a step toward your peace of mind.

Common Mistakes To Avoid

• Waiting Too Long To Start: Emergencies can happen tomorrow. Start with what you have.
• Saving Too Aggressively: Set a realistic goal to avoid giving up.
• Using The Wrong Account: Avoid accounts that are easy to spend from.
• Ignoring Medical Inflation: Adjust your target every 12–24 months.

Final Thoughts

Medical emergencies don’t wait for you to be ready. A health emergency fund provides not only financial protection but also emotional and mental relief during stressful times.

When you start small, stay consistent, and protect the fund from misuse, you create a reliable safety net that supports your well-being.

You don’t need to be wealthy to prepare; you just need to be intentional and disciplined.

Your future self will thank you.