Emergency fund is money set aside for use in cases when you suddenly have to spend on something very important or urgent. It could be anything from job loss, sickness, and unforeseen expense. Actually, you can recognize it easily when you experience it.
Emergency fund, or funds for that matter, should be accessible any time the need for it arises. Personally, I had been aware of the concept of emergency fund during my high school years and I got to build up my own only when I got my first job. I didn’t take it too seriously then. As long as I had some money in my savings account, I thought I was okay.
One random day, I read an article on personal finance talking about emergency funds and how much of them one should have. The exact amount wasn’t indicated but the author mentioned that it should be six months’ worth of one’s salary. In the case of a job loss, that amount should enable you to provide for your needs and pay your bills while you’re still looking for a new steady source of income. As soon as my mind absorbed that idea, realization hit me. My emergency fund wasn’t enough and that I should do something about it.
So, what I did was, I gradually built up my emergency fund until it reached the “ideal amount.” And I didn’t just stop there. I also tried hard to save more. Of course, it wasn’t easy, because I was the breadwinner in our family then. I was feeding six mouths, sending four siblings to school and providing for my personal needs as well. I remember juggling two jobs then and didn’t have any health insurance. Thinking about it now, I feel so relieved and grateful God took good care of me all those years. Through hard work, discipline, and a lot of faith, I was able to achieve my goal.
Now that I’m married, and my financial obligations to my family has shrunk considerably because my siblings are now working and contributing money to cover family expenses, I continue to build up my personal emergency fund. Knock on wood but I know it will come in handy when my aging parents get sick or something bad happens to me or to any of my siblings. (Yeah, that’s still the breadwinner in me talking!)
And then of course there’s the marital or joint emergency fund that the hubby and I are setting aside some money for. We’re still building it up and it’s far from the ideal amount considering our monthly expenses these days, but I know we’ll get there sooner or later. (I’m claiming it already!)
For these emergency funds, we get the money mainly from our salaries. I wish I have other sources of income but currently, the two side jobs (online and at the restaurant) I have are almost non-existent because I don’t have much time to attend to them due to my heavy workload at the office. Anyway, I know this is temporary and soon I’ll have more time to be productive and earn extra money.
The hubby and I have also recently invested on something very important which we think will help improve our lives in the future and enable us to further increase our emergency funds (the bigger the amount, the better).
How about you, do you also have an emergency fund? Share your thoughts on it with me and we might just learn a thing or two from each other. 🙂