Creating An Emergency Fund

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January 24, 2021 | | Personal Finance |
Why have an emergency fund?
An emergency fund is like the fire extinguisher you keep at home. You hope you’ll never have to use it—but when there’s a need, you’re glad it’s there.
 
You may need your emergency fund if the unexpected happens:
i. Job loss
ii. Car repairs
iii. Medical expenses
iv. Home repairs
v. Unexpected travel requirements
vi. Unexpected bills (tax or other utilities)
 
How much should I have in my emergency fund?
Aim to have enough in a savings account to cover 6 months of expenses. Everyone’s situation is different, so you can adjust that number based on your circumstances. These are your monthly expenses:
3 Months

Aim for this if you have no children or others depending on you and an easy-to-replace job

6 Months

Most people should aim to have 6 months of expenses covered in a readily accessible account

9 Months

Aim for this if your income fluctuates (especially if your job is highly dependable on commissions)

Tips to help you build your buffer

Saving even RM50/week (that’s RM2,600 a year) is a great start.

• Use credit wisely – Track your spending to be aware of what you have

• Curb impulse buying — stick with your list

• Avoid fees (late charges, minimum balance, ATM fees, etc.)

• Plan ahead for big purchases

• Avoid cash advances

• Use direct deposit

• Jump start your savings with a tax refund or other windfall

Think you need help? Let us know and we'll be there for you

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