The Power Of Emergency Fund

After works several years and learn about Financial Planning from a year ago, I learn many things that become a turn back in my financial condition.
One basic thing that I really want to share is about Emergency Fund. Emergency Fund is a simple thing that means many things. To start an Emergency Fund is one of the best things I do along my way. I say this because of several important things:

·         Emergency Fund can prevent us from getting into debt
When we have money, why we have to borrow someone else money? It is a simple question I think. I try to collect an Emergency Fund about 3 times from my income/expense. When something urgent happened, I don’t have to be panic because I can use my Emergency Fund instead of borrowing from my parents or even using my credit card [I used credit card for a payment tools]. For example when my laptop crash, and I don’t know how to work without it and to fix it, I can use my Emergency Fund first and then build it up again from my next income.

·         Emergency Fund is your bank
It doesn’t mean that we have to build a bank; I just want to make a simple imagination. Most of us go to the bank and borrow some money, example to build our business. If we have built big Emergency Fund, we can use it first to build our business and by the time we can collect the emergency fund again. It is better if we really prepare our business plan so we know how much the return and how much money we can separate to collect our Emergency Fund again [in one or two year, as soon as possible]. In Financial Planning it is more ideal if we can prepare special fund to build our business, but if you don’t know how to start, just build your Emergency Fund first.

·         Emergency Fund helps you protect your family
We don’t know when bad things and bad times come to our lives, and it is a risk that we can’t avoid. So I believe that we must prepare for that, when ‘the rain’ is come [do the best that we can do]. Many things like when our parents or children are sick and need to go to the doctor and buy some medicine, or when we are no longer in the same job (being fired or move to a new job we like with a smaller income), or when accident happen so we have to fixed the car/motorcycle. We can use our Emergency Fund for these causes, the condition that we can’t predict. Our family still can survive for a few months [according how much Emergency Fund you’ve prepare; minimum 3 times for single and 6 times for married, will increase if you have children]. When we can’t do our responsibility as a source of income, and we need time to get back to work again in normal condition, our family still can survive with Emergency Fund we own.

I still can write things why I like the Emergency Fund, but the important thing for me is many people start to build their Emergency Fund; it’s for our own good, our family and others who are important for us.

We can start from what we have today, don’t compare to others. Put the money in the form that we easily can access [some in bank account, the rest can be in the deposit or gold] but don’t forget to build it again after you use it.

Start your Emergency Fund now and feel the benefit of it!

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