Natalie Thomas, 25, offered to help with a fund which was set up after Laura Rees, 22, died on her way to be fitted for a bridesmaid dress in 2012.
Thomas, of Whitland, Carmarthenshire, admitted theft at Llanelli Magistrates' Court and will be sentenced at Swansea Crown Court later this month.
The court heard how Ms Rees's friends wanted to raise money in her name.
Prosecutor Ellie Morgan said Thomas organised a charity night, including a quiz, karaoke and an auction.
"But she delayed handing the fund over and on the actual day it was supposed to be handed over the money did not materialise," she said.
The money was supposed to go towards a hospital's children's wing but magistrates heard how Thomas admitted "dipping into the fund" over the months.
"She intended paying it back but things got out of control and she couldn't pay it back. She then covered her tracks in a dishonest way," said Ms Morgan.
Nursery worker Ms Rees, of St Clears, near Carmarthen, died in October 2012 in the head-on collision.
She was buried in her bridesmaid dress.
Bride Katie Phillips, now Davies, went ahead with her wedding as many of their friends then staged fund raising events in her memory.
After Thomas's court hearing, Ms Rees's mother Angela said: "I am absolutely disgusted with her. She has betrayed the trust of myself and Laura.
"Everyone said she did a marvellous job at the time raising the money and then this happens.
"I just couldn't believe anyone could stoop as low as this."
A woman stole £8,500 from a memorial fund for her friend who was killed in a car crash, a court has heard.