Saturday, June 20, 2015

On Emergency Funds

The first 2 weeks of June has been a little bit difficult for me. We are on a very tight budget with the husband just went on medical emergency. Thank God, he is getting better now.

This is where Emergency Fund enters. And so I learned that to keep at least 3 months worth of funds will help us survive for another 3 months. I am glad, we have learned this emergency fund. The emergency fund that should only be use for unexpected events in life such a loss of job or medical emergencies.

Where do we keep it? It is very liquid as we keep it on our savings account and BPI auto-save up. Half of it in time deposits staggered of holding period.

However, remember that in my previous post, I borrowed 40,000 to complete the house of my parents, and honestly been working on paying it up and at the same time, building it up to meet at least the 200, 000 pesos for this fund.

Why this amount?

Well, I know a friend who had been out of job for more than a year. And it actually depleted their savings. So I can't actually based it on a 3 months worth alone. But since we have just started so the 3 months WAS then a good deal for us. Nonetheless, my plan at the back of my mind is to at least complete a 12-month emergency fund.

And you maybe asking, ganun ba kalaki ang monthly expenses namin? The answer is no. The other half of the supposed fund is actually for the household expenses includes our food, baby's needs, monthly apartment rent, apartment electricity, and fares. Walang nakalaan sa tubig because naka water pump pa sa apartment.

It was just recently that I chanced a forum which was able to provide meaning into these - Emergency Fund and Household Expenses(Full Emergency Fund). And yes, that was exactly my thoughts pero hindi ko siya malagay sa words. Thanks to that someone who shared that. And now, I am able to understand it better.

The forum sharer advised to at least create an emergency fund ranging from 50k to 100k for any events that wasn't actually plan such as what I mentioned. But of course this is dependent to your lifestyle. For us, that is just the right amount. While the household expenses are intended purely to the expenses at home. Para sa akin, dalawa pa rin silang category and it will be helpful and easy to manage kung alam natin kung saan kukuha ng pera para sa panggastos daily versus para sa pag-apply ng work or kukuhanan ng pambili ng gamot. It makes sense to me.

So our plan right now, is to use our remaining emergency until my husband finds a new job. While, the income from our other investments will help build the household expenses. It's the plan B from the original plan that all of the investments income should be invested again.

Sometimes, we really have to deviate from the original plan since there are circumstances which comes on our way suddenly. What's important is we are able to at least be ready on our first line of defense. And that we are ready to use an alternate plan. I know we have 26 letters in our alphabet just in case our plans today will not work. With the help of the One above, I know we can make it. For He knows His plans for us, and that is for us to prosper.

Positivity. God Bless.

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