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1983

Abstract

certain amount of every income you receive. This act is what George Clason regards as ‘paying yourself first.’</p><p id="7f04">The best way to set up an Emergency Fund is to transfer a percentage of your weekly or monthly income elsewhere. This way, you focus on the rest rather than the whole.</p><h2 id="6b42">2. How do I Calculate my Emergency Fund?</h2><p id="044f">There is no fixed amount for an Emergency Fund. It varies based on your take-home pay, relationship status, discipline level and number of dependents.</p><p id="6f7a">According to a rule of thumb, as recommended by experts, aim for an Emergency Fund equivalent to three to six-month worth of expenses.</p><h2 id="bf83">3. How and when should I use my Emergency Fund?</h2><p id="66ca">It is a pity that some squander their Emergency Fund on trivial tasks. We cannot blame all. Some are just ignorant of its proper usage.</p><p id="6833">Setting up your Emergency Fund for tasks such as vacation, a new car, or a new set of shoes is WRONG. Though they may seem key to inner fulfillment, that is not the actual purpose of an Emergency Fund.</p><p id="37a0">After all, a vacation is not an unexpected, bad event; You preconceive it.</p><p id="ea44">The COVID-19 pandemic gave an ideal example of a suitable period to make use of your Emergency Fund. The timing was spot-on. Companies suffered a downturn. Tons of people lost their job. No income. Expenses probably increased. It was, in the truest sense, an unexpected event.</p><p id="5bef">That scenario shed more light on the significance of an Emergency Fund. And the few who had a hefty Emergency Fund were grateful they did, as it turned out to be effective when it mattered.</p><h2 id="a2a6">4. As a student, can I own an Emergency Fund?</h2><p id="de86">On the top of my voice! Of course, YES!</p><p id="4c4a">A student is not too young to own an Emergency Fund. Think of it as being responsible for your life.</p><p id="1802">When your parents or guardians l

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ose their job or suffer a financial downturn, your Emergency Fund may come in handy.</p><p id="6d42">Even if you do not experience such, you could use your Emergency Fund as a beacon of hope during hard times. This, in turn, instills in you a responsible mindset.</p><p id="3c05">Even so, in the past, it was far easier to get a good-paying job after graduation. But now, the reverse is the case. As a result, an Emergency Fund would be beneficial to young graduates still seeking jobs</p><h2 id="3cef">5. Emergency Fund Vs. Savings Fund?</h2><p id="d8b8">An Emergency Fund and Savings Fund sound somewhat similar. You might attempt to think of both as interchangeable. But there exists a subtle difference between both terms.</p><p id="3076">An Emergency Fund is a savings fund designed for sudden, unexpected circumstances. The Covid-19 lockdown is a relatable example.</p><p id="91ad">While a Savings Fund is a general term used to describe all income kept for future purposes. This includes saving for a new car, home, phone, etc. A savings fund entails all, including an Emergency Fund. While an Emergency Fund is a subset of a savings fund.</p><h2 id="cc6b">6. What benefits do I stand to gain from an Emergency Fund?</h2><p id="7c56">Besides the tangible benefits, an Emergency Fund offers many intangible benefits.</p><p id="e4e4">The tangible benefits entail assisting in paying bills after a job loss or a loved one medical bills.</p><p id="c01b">The intangible benefits make up the peace of mind and confidence that it can restrain any financial debacle you face. And if we are being realistic, this feeling is bliss and soothing.</p><h2 id="fc40">Concluding Thoughts</h2><p id="b18b">Rather than leaving what becomes of your future to mere fate, you can keep it in safe hands by keeping aside an Emergency Fund. Strip yourself off of today’s pleasures and enjoy later or spend recklessly and face the brutal consequences later on. The choice is yours.</p></article></body>

Emergency Fund: All You Should Know

This piece contains all you need to know about an Emergency Fund

Life is not rosy: it is characterized by ups and downs.

The same goes for our finances. Sometimes an unexpected bonus comes our way. Other times, we get stuck with huge, unforeseen expenses.

The good news is that you can sail successfully through the good and bad times with an Emergency Fund rather than taking the roller coaster ride.

What is an Emergency Fund?

An Emergency Fund is a sum of money set aside for unexpected events. It proves beneficial when you lose your job or suffer a life-threatening illness.

Think of the act as proactively solving today a problem bound to arise in the future. Interesting, right?

That an Emergency Fund guarantees to solve future problems is not all there is about it. There are a few criteria you should consider. Here are some of those questions you should consider when setting up your Emergency Fund.

1. How Should I Go About It?

Whether your income is irregular or fixed, you must seclude some of it for unforeseen events. For some, this may seem challenging, particularly for those with responsibilities beyond themselves. I do understand.

By the way, I learnt a 3-word tip from George Clason in his book, The Richest Man in Babylon: Pay Yourself First. This statement, I believe, has in it a lesson for everyone.

In simple terms, it implies you should set aside a certain amount of every income you receive. This act is what George Clason regards as ‘paying yourself first.’

The best way to set up an Emergency Fund is to transfer a percentage of your weekly or monthly income elsewhere. This way, you focus on the rest rather than the whole.

2. How do I Calculate my Emergency Fund?

There is no fixed amount for an Emergency Fund. It varies based on your take-home pay, relationship status, discipline level and number of dependents.

According to a rule of thumb, as recommended by experts, aim for an Emergency Fund equivalent to three to six-month worth of expenses.

3. How and when should I use my Emergency Fund?

It is a pity that some squander their Emergency Fund on trivial tasks. We cannot blame all. Some are just ignorant of its proper usage.

Setting up your Emergency Fund for tasks such as vacation, a new car, or a new set of shoes is WRONG. Though they may seem key to inner fulfillment, that is not the actual purpose of an Emergency Fund.

After all, a vacation is not an unexpected, bad event; You preconceive it.

The COVID-19 pandemic gave an ideal example of a suitable period to make use of your Emergency Fund. The timing was spot-on. Companies suffered a downturn. Tons of people lost their job. No income. Expenses probably increased. It was, in the truest sense, an unexpected event.

That scenario shed more light on the significance of an Emergency Fund. And the few who had a hefty Emergency Fund were grateful they did, as it turned out to be effective when it mattered.

4. As a student, can I own an Emergency Fund?

On the top of my voice! Of course, YES!

A student is not too young to own an Emergency Fund. Think of it as being responsible for your life.

When your parents or guardians lose their job or suffer a financial downturn, your Emergency Fund may come in handy.

Even if you do not experience such, you could use your Emergency Fund as a beacon of hope during hard times. This, in turn, instills in you a responsible mindset.

Even so, in the past, it was far easier to get a good-paying job after graduation. But now, the reverse is the case. As a result, an Emergency Fund would be beneficial to young graduates still seeking jobs

5. Emergency Fund Vs. Savings Fund?

An Emergency Fund and Savings Fund sound somewhat similar. You might attempt to think of both as interchangeable. But there exists a subtle difference between both terms.

An Emergency Fund is a savings fund designed for sudden, unexpected circumstances. The Covid-19 lockdown is a relatable example.

While a Savings Fund is a general term used to describe all income kept for future purposes. This includes saving for a new car, home, phone, etc. A savings fund entails all, including an Emergency Fund. While an Emergency Fund is a subset of a savings fund.

6. What benefits do I stand to gain from an Emergency Fund?

Besides the tangible benefits, an Emergency Fund offers many intangible benefits.

The tangible benefits entail assisting in paying bills after a job loss or a loved one medical bills.

The intangible benefits make up the peace of mind and confidence that it can restrain any financial debacle you face. And if we are being realistic, this feeling is bliss and soothing.

Concluding Thoughts

Rather than leaving what becomes of your future to mere fate, you can keep it in safe hands by keeping aside an Emergency Fund. Strip yourself off of today’s pleasures and enjoy later or spend recklessly and face the brutal consequences later on. The choice is yours.