Building an Emergency Fund

I’ve started investing already and one thing that I forgot is to save my own emergency fund. I know it should be first on my lists! I’ve heard how essential it is to have one. Emergency fund should be a very liquid amount where you can pull out anytime in case of emergencies (of course from the word itself). It is an unexpected event that may require immediate consideration. Examples for emergency situations are: Medical Emergency, Job loss and Property loss.

The Buffer fund (that’s what I call it) should amount to 3-6 months worth of your total monthly expenses. Why expenses? Your Income and Savings may stop but sadly not the expenses. Let’s say if you get sick, you need to go to the hospital, your income will stop and we all know that no work - no pay, right?  Also, in case you lost your job and you may have to maintain your current lifestyle. What if, at that point in time you’re still paying a debt? That’s a huge financial loss! This fund should be separated to your savings account.

Related Posts Plugin for WordPress, Blogger...