If you’ve wondered what an emergency fund is and how it can provide great relief at key financial moments for you, here’s how to create one effectively.
There are a variety of economic events that could destabilize our economy, for example, diseases or accidents in which we have to invest immediately an amount of money that, perhaps, we did not have earmarked for that.
That is why it is important to consider having an emergency fund for unforeseen expenses at the least opportune moments.
Why set up an emergency fund?
The phrase “when it’s your turn, don’t take it off” already says so, and you never know when financial contingencies may arise that put our economy in jeopardy that, if we don’t have a savings fund, we could collapse.
If you use part of your income to create an emergency fund, you will be able to use that money without worries, because that is what it was destined for.
And you’ll be able to save on stocks like borrowing from family members or having to pawn things of value.
Tips for creating an emergency fund
As we already know that we cannot prevent difficult moments from arriving at some point in life, it is best to be financially prepared for when they arrive and here we will tell you how to achieve it.
Destine 10% of your income
The ideal is that whenever we think about saving, we calculate it with 20% of our salary income. If we think in this way, 10% could be allocated to savings for our personal tastes and the other 10% to the emergency fund.
This also applies when you receive bonuses, bonuses or any other extra income. That 10% could save you thousands of pesos at the earliest moment.
Establish how much you want to save
Like everything else, one of the main recommendations is to set a savings amount, or do it by monthly goals.
It is most likely that this emergency fund will be between three and six months of your current salary, this will allow you to meet any emergency, if not in its entirety, if a large percentage.
For example, if you become unemployed, you can survive for the next six months in what you find a new one because you have six months of your salary saved in an emergency fund.
Set specific goals and amounts
Although we mention that the ideal is that you can devote 10% of your salary to the emergency fund, there is another option that may also be very feasible for you and is savings under goals.
For example: in the first three months you will be able to save 7 thousand pesos.
Make your savings grow
There are savings programs, mainly in insurance companies and banks, with which you can grow your investment, how?
Imagine that you save 2,000 pesos a month, your insurer can increase your savings by the same amount in the short, medium or long term, also cover risks such as theft or loss if you have this savings in an account.
Since it is money and for a very special purpose, it is not recommended that you have it in a piggy bank somewhere “safe” in your home, but as we mentioned in the previous point in a place where you can make sure that in case of theft or loss that fund will remain intact.
The ideal is to create a bank account where you can deposit your money and guarantee the preservation of your capital. It is also not recommended that you have this fund in shared accounts, but that it be an individual account, so that you are the only person who can have that money if necessary.
If you are going to use it, replace it as soon as possible
It’s a fact that at some point you’ll have to use that money, since that’s what you’re saving for. However, it is recommended that in doing so, you immediately begin to collect again.
Now, if for some reason, you use that money for another type of destination, it is also very valid, because in the end it is yours, but the premise is the same, you will have to replace it as soon as possible, because if you leave the fund empty for some personal taste, at the time of an emergency, you will be involved in an economic crisis.
Plan B: Personal Credit
While having an emergency fund is one of the best habits we can adopt, sometimes it’s not possible for some reason. Therefore, we should always consider a Plan B, in this case a personal credit.
A personal credit, as well as an emergency fund, will allow you to get out of an immediate hurry and return the money with the same feasibility with which you save, since a part of your paycheck will be used for the return.
Ask about the personal credits that Credifiel has for you, so that when you need it you will have at hand one more option for emergencies.