Personal Finance has been a growing topic these days. Here in the Philippines, there is still a lot of work to do to educate people on ways of handling finances properly, much more in making money work for them.
It consists of building the Emergency Fund, paying off Bad Debts, and allocating savings for Retirement. In this article, we are going to focus on building the emergency fund.
What is an Emergency Fund?
The emergency fund is a sum of money equivalent to 3 - 6 months of your current living expenses. Say for example, your monthly expenses - bills, allowances, rent, mortage etc. is about Php 30,000 per month. Your emergency fund should at least be Php 90,000.
Where should I put this money aside?
This money is set aside in a bank account which is readily accessible in cases of emergency. It is best to have it in bank account with atm.
What is the purpose of your Emergency Fund?
As the name suggests, it is sum of money allocated for emergencies -unforseen life changes like getting sick, running into an accident, and the like. In those times, you will not be able to work and earn, but there will be expenses required for recuperating. This is where you get the money for such things.
Aside from that, there will come a time in life when we feel like going to a career shift, move to another state or perhaps another country. You can use your emergency fund to finance for these life changes, while you are adjusting to life changes and unable to earn yet.
Start building your emergency fund, now!
#PersonalFinance
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