The emergency fund is a savings set aside for use in times of need. It is best to use this fund only when desperate for money. It is only to meet the needs and not the wants. One example of use during an emergency is if you or a close person, such as a family member, needs to be admitted to the hospital.
You also definitely need a fund in case you suddenly lose your source of income. The probability of that happening is higher in 2023 when the world economy experiences a recession. The question now is, have you prepared it?
Picture: debt.org
How to have your emergency fund ready?
1) Improve financial security
- to act as a ‘safety net’ for your money deprivation on unexpected moment
- keep at least 6-12 months of your salary
2) Be aware of your commitment
- if you’re working in non-government sector, make sure to be prepare on the unexpected situation especially bankers, oil and gas workers
- E.g: get fired because of the economy recession
3) Understands the formula for emergency saving
- Use 50:30:20 method for your savings
- Don’t put too much or too little on your emergency savings. Again, go back to your commitment and see if it’s need a huge budget every months or not.
4) Plan your emergency savings proportionately
- 50: life commitment, 30: fund, 20: savings
5) Alert on the right place to save the fund
- For example, you decide to keep your money in ASB, but you cannot withdraw the money with the amount that you want anytime at any place.
- If you’re worrying on that matter, it’s better to keep it in the bank account.
- Better late than sorry. Better wait for the such period rather than have no savings at all.
6) Comprehend the level of emergency
- There are 2 levels of emergency: A.S.A.P emergency and prepared emergency.
- You need to split your cash evenly on different money savings platform.
- You can always spare your savings on property, stocks, crypto and gold. for prepared emergency savings.
7) Always be ready for uncertainties
8) Don’t be too confident of your job securities
9) Choose the right time to start saving your fund
10) Split your salary for emergency savings for at least six months
11) Enhance the knowledge of asset classes
12) Understands what is ‘paper gain.’
13) Invest your savings in fixed-share units
14) Don’t sell your stocks when you’re in urgent of money
15) Get a credit card for emergency use only
Never underestimates the uncertainties, as you cannot predict the unfortunate in the future. For details information on emergency savings, you can click the full video below:
Source: Financial Faiz @ YouTube
