An emergency fund is something that we all consider as a vital item to have in adult life, but it is also something that you never get around to starting. When you think of the money needed for a fund that can cover anything from a fire to cancer, your mind will immediately show a number with a lot of zeros. So thinking of all the bills, taxes, everyday groceries and other expenses that pile up in the house, it does not seem as something feasible. But this can turn into a lot of regret when the emergency does come down knocking on your door.
Keeping in mind what is an emergency
The emergency fund, as it is, is something that you must never touch unless it is a life threatening or bankruptcy-inducing scenario. There is no point in having that fund if you keep dipping your fingers in and taking in a bit money every time. The emergency fund is there to still sit and keep swelling up with your money and interest until your immediate family, friend or yourself is in danger. This is one of the easiest ways to stay away from loan sharks and a money lender in Singapore.
The difference between splurge fund and an emergency fund
To get away from the temptation of buying an Alienware laptop when your emergency fund starts fattening up to thousands, start your own splurge fund. Do not use your emergency fund for the flat screen television or the processor that you have been eyeing for a while. If you want to buy something that costs quite a bit of money, then start a different account, the splurge fund, to save up to buy something that you like. Emergency fund is to be used when you need to, and not when you want to.
Make an initial target a reality
The best way to get going with your emergency fund is to set a low initial target that you want to reach and then slowly but surely lift the bar as you keep saving. If you need a huge initial startup that you feel like borrowing funds, do not do it. Start small and make the initial target level, something that you can achieve in two or three months. This way it will be easier for you figure out how much you need to allocate each month.
Once you down the path of debt, it is hard to turn back. This is one area when concerning money where prevention is multitudes better than mitigation measures. When your car breaks down, or your parent’s needs a bypass done, you do not need to sell the house to cover the funds needed.