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4 Tips to Build an Emergency Fund
Emergencies are always unexpected, but that doesn’t mean you should be caught unprepared.
Whether it is something as trivial as car repairs or as crucial as a health crisis, you can rest easy when you have the funds to cover these expenses.
As the name suggests, an emergency fund is meant to be touched only during emergencies– and no, the release of the latest gadget doesn’t count.
Here are four tips to building an emergency fund.
Treat the emergency fund as an important part of your budget. Just as it’s important to pay your utility bills on time so that your electricity and water don’t get cut off, you should treat building your emergency fund with the same sense of urgency.
To help with that, you can try thinking of what the worst-case scenario for you is. Is it losing your job? Being diagnosed with an illness? Being unable to afford repairs for your car and home? Thinking of this may spark your motivation to get serious about building the fund, and it also helps you be clear on the types of situations you consider as true emergencies.
Save consistently. There are many methods for saving. Some resolve to save every single 50-peso bill they come across; others save a specific percentage of their income. One isn’t better than the other, and it all comes down to which savings strategy is the most convenient and feasible for you.
That’s because not everyone’s income situation is the same. Salaried employees can afford to set aside a specific amount every pay day, while freelancers or contract workers may find it easier to allocate a certain percentage of their earnings from every job they get. Whatever the method may be, the key to saving successfully is if you’re able to do so consistently.
Be flexible about the fund and how to build it. Even if your emergency fund is reserved for what you consider to be the worst-case scenario, the reality is there may be fewer emergencies that still need to be addressed. For example, you’re saving up for the possibility of unemployment, but your car breaks down and requires major repairs. Don’t be afraid to use your emergency fund in such cases.
In the same way that the nature of emergencies can change over time, your available funding sources may also change. You can get promoted, enjoy a performance bonus, or snag a big project. These are opportunities to adjust your savings strategy accordingly, like increasing the amount you committed to save or the percentage of income you’ve allocated to the emergency fund.
Whether it is something as trivial as car repairs or as crucial as a health crisis, you can rest easy when you have the funds to cover these expenses.
As the name suggests, an emergency fund is meant to be touched only during emergencies– and no, the release of the latest gadget doesn’t count.
Here are four tips to building an emergency fund.
Treat the emergency fund as an important part of your budget. Just as it’s important to pay your utility bills on time so that your electricity and water don’t get cut off, you should treat building your emergency fund with the same sense of urgency.
To help with that, you can try thinking of what the worst-case scenario for you is. Is it losing your job? Being diagnosed with an illness? Being unable to afford repairs for your car and home? Thinking of this may spark your motivation to get serious about building the fund, and it also helps you be clear on the types of situations you consider as true emergencies.
Save consistently. There are many methods for saving. Some resolve to save every single 50-peso bill they come across; others save a specific percentage of their income. One isn’t better than the other, and it all comes down to which savings strategy is the most convenient and feasible for you.
That’s because not everyone’s income situation is the same. Salaried employees can afford to set aside a specific amount every pay day, while freelancers or contract workers may find it easier to allocate a certain percentage of their earnings from every job they get. Whatever the method may be, the key to saving successfully is if you’re able to do so consistently.
Be flexible about the fund and how to build it. Even if your emergency fund is reserved for what you consider to be the worst-case scenario, the reality is there may be fewer emergencies that still need to be addressed. For example, you’re saving up for the possibility of unemployment, but your car breaks down and requires major repairs. Don’t be afraid to use your emergency fund in such cases.
In the same way that the nature of emergencies can change over time, your available funding sources may also change. You can get promoted, enjoy a performance bonus, or snag a big project. These are opportunities to adjust your savings strategy accordingly, like increasing the amount you committed to save or the percentage of income you’ve allocated to the emergency fund.
Identify your lifeline. While you may have your emergency fund on standby, there are instances when this might not be enough. It’s important to do your research and identify sources that can help augment your emergency fund by providing additional funding quickly and easily.
Salmon Credit can act as your lifeline and help you in times of trouble. You can borrow up to PHP50,000 without worrying about any hidden fees and charges. Plus, you only need to apply once for this flexible loan that allows you to reuse the funds whenever you need them! Learn more here.
Salmon Credit can act as your lifeline and help you in times of trouble. You can borrow up to PHP50,000 without worrying about any hidden fees and charges. Plus, you only need to apply once for this flexible loan that allows you to reuse the funds whenever you need them! Learn more here.
08.08.2024