Strong Foundation: Financial: Emergency Fund

Essentially, a lot of people seem to think of security, a buffer (the bigger, the better) and what may seem like any kind of aspect in their lives. Insurance for health and hospitalization, a back up wedding dress in case of emergency (totally made up), possible date #2 if date #1 ditches you (seriously?) and of course, having the money that you need in case of “emergencies”.

(Drumroll please)

the EMERGENCY FUND!
(basically, 3-6 months worth of money in a money market fund or any savings account – never mind the interest growth, it’s not for your investment, set aside for “emergencies”)

However, let me define these “emergencies”, regarding the financial aspect. This is how i see things, so if you have something to say about them, they are very welcome.

Emergencies wherein you can use your emergency fund, DON’T INCLUDE THESE –
1. surprise super sale in your nearby mall (which coincidentally happens every time you get your salary). not much of a surprise anymore is it?
2. the newest phone in the market with a projector and voice activated applications that can take control of all of your appliances in the house (believe me, with how fast technology is developing right now, that phone will lose 40-60% of its value in months)
3. a brand new display and a fresh batch of clothes for your favorite online shop and mall boutique, how timely! I just so happened to wear another dress more than once (twice! the horror!).

You get the idea. Here are the examples worthy of the Emergency Fund endowment (but you have to put it back as soon as you can).

Emergencies include abrupt medical issues (insurance can cover it but you got to have that quick slip dough just in case), your car broke down because your gas pump finally gave out, seat sale for a key business trip and speaking convention (i know, i know, these sales strategically or “coincidently” pop up from nowhere but always look out for VALUE).

There you have it. Remember, make sure to complete your EMERGENCY FUND as soon as possible and get to work on the other steps towards financial peace.

I’m actually working on this step and it’s going smoothly.

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One Response to Strong Foundation: Financial: Emergency Fund

  1. Pingback: A Strong Foundation (series) « everyroundcounts

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