Money goals and your emergency fund

Saving is much easier when the money has a name. Clear goals keep you motivated, and an emergency fund means a surprise bill becomes an inconvenience rather than a crisis.

Turn wishes into goals

• A goal needs an amount, a deadline and a reason. 'Save for a laptop' becomes 'Save AED 3,600 for a laptop by June for my university course'.
• Divide the amount by the months you have: AED 3,600 over 9 months is AED 400 a month.
• Split goals by time: short term (under a year, such as a phone), medium term (one to three years, such as a driving course or a gap year) and long term (university, a first car).
• The CFPB says having a specific savings goal can help keep you motivated, and celebrating milestones along the way helps too.

Make saving automatic

• The CFPB calls automatic saving 'one of the easiest ways to make your savings consistent'.
• Set up a recurring transfer into savings on the day your allowance or pay arrives.
• Save a fixed amount each week or month, and add extra when you can.
• Save windfalls: the CFPB suggests putting all or part of gifts and holiday money (such as Eid money) into savings.

What an emergency fund is for

• The CFPB describes an emergency fund as 'a cash reserve that's specifically set aside for unplanned expenses or financial emergencies'.
• Real emergencies for a student include a cracked phone screen, a laptop repair before exams, a lost travel card or a medical cost not fully covered by insurance.
• A sale, a concert or a holiday is not an emergency. Use a separate goal for those.
• When you use the fund, make topping it back up your next saving priority.

How much to aim for

• There is no single correct number. The CFPB suggests thinking about unexpected costs you have faced before and what they cost, and notes that even a small amount helps.
• NS&I, the UK government's savings bank, cites MoneyHelper's suggestion of three to six months of essential outgoings, but says this does not need to be your first target.
• A good first step for a teenager: AED 500 to AED 1,000 for small surprises.
• Worked example for a university student: essentials of AED 1,200 a month x 3 months = AED 3,600. Saving AED 300 a month, that takes 12 months.

Where to keep it

• Keep it safe, easy to reach in a real emergency, but separate from your everyday spending money.
• The CFPB says a bank or credit union account is generally considered the safest option. Cash at home can be lost, stolen or destroyed.
• NS&I suggests checking how quickly you can get your money, whether there are charges for withdrawals and whether your money is protected.
• Name the account or pot 'Emergency' so you think twice before using it.