emergency funds 101.
Hello peeps!
LIFE HAPPENS.
Unfortunately, things can (and will) happen that seem to derail your plans or force you to hit the “reset button” when you least expect. While we certainly wouldn’t wish some of life’s unpredictable events on anyone, we know that at times, some (or maybe all) of us will be thrown that curveball.
Wondering what you can do to protect yourself from these instances? Let me present to you: the Emergency Fund.
What are they?
An emergency fund is just another name for a stash of cash that you could rely on in case of an emergency or some other unpredictable event (like losing your job, needing to pay more than expected for a medical bill, a flooding basement, sick pet, puncture tyre, etc.).
Why have one?
Things do happen, and having to rely on the support of friends or family to help you is not always a great or enjoyable strategy. Additionally, paying high credit card interest is no way to live. Imagine the debt you may have to endure if you need to take out a credit card just to pay some bills in the event of an emergency. That interest doesn’t care if you lost your job or if you’re down on your luck. Having an emergency fund handy provides such peace of mind in these types of difficult circumstances.
How much should I have?
This can depend, but generally speaking, it can make sense to have at least 3-6 months of your income saved in an emergency fund. This way, you have enough money set aside to help you get by and still cover all of your current expenses if your income suddenly ceased to exist (or was reduced). Note: if you have unpredictable income or a very unsteady employment situation, consider adding additional months of income to your emergency fund just to be on the safe side.
Where should I keep it?
Money saved for an emergency should be highly accessible and stored in a safe and secure place. (READ: do not invest it). Open a safe and secure high-interest (aka: high-yield) savings account with minimal or (ideally) no account minimums or fees. My favorites include Maybank or Bank Islam. For more suggestions as to where to open your account, consider hopping on over to iMoney to view their most updated list of recommendations.
The bottom line?
Protect yourself and start setting aside money in an emergency fund TODAY. I hope you never need to use the money, but if you do, you’ll be glad you have it!
Hope you guys enjoy my writing,
Spread love and positivity.
Kindest regards,
EMIR
