In this time and age where change is the only thing that’s constant, even the most methodical and systematic of human beings can be jolted to the core by an emergency.
And the last place you probably want to see yourself in is in a corner, hapless and helpless, shaking your head in defeat or perhaps crying yourself to sleep because you’re simply not prepared to deal with the situation.
There are a lot of circumstances falling under the emergency category, but today, we will be talking about financial emergency.
What is a financial emergency?
Most people associate financial emergencies with sudden illness in the family, loss of employment or other sources of income, flash floods, landslides, the roof leaking, your car not starting, especially if it’s your husband’s only source of income, him being the most reliable taxi driver in town, your kitchen pipes bursting, your kid’s out-of-town field trip coming up this weekend, and so forth.
pretty, I know, but believe me, the list can go on and on and on.
Before we go any further, though, let me just make it clear that your nail breaking, therefore, you needing to go to the nail salon pronto is not a financial emergency and should therefore be taken out of the list, in case you included it there. (Of course, you know that already. But hey, it pays to smile every now and then.)
Building an emergency fund
This is where the emergency fund comes in. Since we already know that an emergency can happen to practically anybody anytime, anywhere, whether you’re in heels or flats, with curlers on or not, the best course of action is to get moving and start building an emergency fund.
Emergency fund, meaning, money you’re going to have to use only in an emergency.
I don’t have to say this again, but I’m going to say it anyway. Nobody knows when an emergency would strike, so the best time to start building your fund and taking control of your financial situation is NOW.
Now you ask yourself, how? Good question. Look around the house for loose change. Or find things you no longer need that you probably could sell on the Internet.
There are a lot of buy-and-sell sites out there like e-bay.ph or sulit.com. You can also organize a garage sale. This way, you rid your house and your life of clutter, you even get to earn some cash.
If you’re employed, open an auto save-up account so you don’t have to worry about the amount you need to save every time you receive your paycheck. BPI offers this service. Ask your bank if it does as well. Then sit down and create a budget, and stick to it.
How much is enough?
This, I would say, would have to depend on how much would make you feel secure. Some would say three months worth of expenses should be okay. Others argue that people with family, especially school-age children, should have at least a year’s worth of expenses in savings.
Whichever you choose, whichever you think is right for you, make sure that your savings is highly liquid, meaning readily available and convertible to cash.
No amount is too small
However small your savings is now, as long as you’re determined, committed and disciplined, your savings will grow overtime. A good book rarely happens overnight, and the author patiently writes his story one page at a time.
Money is like machinery. When small, it yields small. But if you have hundreds or thousands of small machinery that works hard for you, the output is enormous.
In your journey towards financial independence, remember this: a peso saved today is a peso closer to your freedom tomorrow. Meantime, recall the lessons learned from the story of the industrious, little ant.
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