Do you have an emergency fund? If not, let’s read this article to know basic of emergency fund.
Emergency fund is an easily accessible stash of money for use only in case of emergency expenses. For example :-
1. Your car suddenly break down and need to repair.
2. Your house get into flood or other’s natural disaster.
3. Family critical sickness.
5. You suffer losses due to theft.
6. Over budget
That’s basic situation that you need to use in emergency. There’s many case you need to use more money than normal monthly expenses.
Why need fund expenses ?
There’s many question for us about the reason to create emergency fund. Do you know your future? Probably none of us can answer the question. We don’t know what happen in our future. Whether it is good or bad. That’s the main reason to create an emergency fund to protect you and your family future financial. Most of us give excuse that their expenses is not enough to save. That’s not true. You still can save a bunch of dollar by using this tips :-
1. Create an automatic saving account using auto debit by cut your salary. The account only be use for emergency case only..
2. Decrease your monthly expenses. Throw away bad habit such as smoking, clubbing, gambling, etc.
3. Make a strict guidelines to use your expenses. Make sure you write on your wall about it.
4. Don’t bring more money when you go out. Avoid to buy unused goods.
5. Follow this steps until you success and consistently make it as your lifestyle.
How much to save emergency fund?
It is up to you to create the saving but as a guideliness 10% from your expenses is the best for fund emergency account. It is better if you can save higher than 10 %. The objective is to create fund emergency that enough for your monthly expenses. The time period is around 3-6 months.
Where to save emergency fund
As I’ve mention about the account must be easy to access and withdraw. In my opinion, create and account without ATM card. You can choose a trust share from government bond. It is more safety and the profit is reliable. The important is the save is guarantee safe.
That’s some basic information about emergency fund. Start your emergency fund from now and you will bring happiness to your future financial planning.
The best emergency fund is 6 months our salary. It is such a huge amount of money but if you have discipline in saving, it is not impossible. Just do your own way.