Life is amazing but we never know what’s ahead of us. For sure, a job promotion, bigger income or greater opportunities can come our way, but we should also foresee misfortunate events that could happen – and how much it will cost you.
Keeping an emergency fund gives you inner peace of mind in a way that whatever happens in the near future, you could carry on. Here are scenarios that could happen and why you should start building your emergency fund:
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Any medical situations, from runny nose to severe operations will cost you money. Not all companies in the Philippines offer sick leaves or medical assistance when their employees need it. But when they do, it’s always subject to your severity and will not cover all your expenses. Some offer a maximum amount of health and medical coverage. Or most of these HMOs will not cover the expensive medicines. It’s always a case-to-case basis. If you have the emergency fund, you don’t need to double-stress yourself out – your physical and financial conditions at the same time. For sure, you don’t want to give yourself a headache when that time comes.
If your job is your main, if not the only source of income and you lose it for whatever reason, you know you’re in a real-deal trouble. The ugly reality is that when you lose your job, your utility bills won’t stop unless you cut your subscription. But not of course if you have an emergency fund that you will use until at least your next job.
Whether it’s a part of your car or your laptop, you will need to shell out money to have it repaired or the damage would only get worse (thus, bigger expense). Automobile and home repairs never come cheap. But if you prepare yourself with important things like these, it would be a tremendous relief for you and your finances.
You have to prepare yourself for anything that may happen – a friend or a relatives gets married, or passes away or any unexpected trips. It’s a heartache (or incredible shame) when you can’t go anywhere because you couldn’t afford it. Lacking an emergency fund will not just make you seem unprepared of life’s unpredictability, but will also keep you away from important, personal events.
Sometimes, it’s unavoidable to move from one house to another. For whatever reason, it will always be something expensive on your part. If you find yourself in that situation, you won’t be able to do so without funds to pay for moving-in deposits, initial payments, taxes, among others. It’s more frustrating if you need to pass on better opportunities simply because you don’t have the emergency fund just when you need it the most.
Remember though that your emergency fund is different from your life savings. Your savings are for your future, such as retirement fund, education or anything that will evidently happen in your life. Emergency fund, as the name implies, is something that you will use for whatever unexpected things life will throw at you.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.