Some of us who may be new to the workforce will not be familiar with the term ‘emergency fund or in some cases, a “rainy day account”’.
Just like how the name suggests, it is an individual’s fund that is kept aside for emergency purposes such as replacing a much-needed electronic appliance, paying a medical bill or losing a job.
So the emergency fund’s purpose is for the individual to be able to fork out a large amount of money due to an unforeseen circumstance WITHOUT being in debt.
According to a recent survey done by Betterment, an investment company, 41% of women do not have money saved up for an emergency.
By not having this rainy-day account, many would incur debt and suffer from its consequences. So, let’s imagine that person A has been let off from a job and they were unable to secure another job fast enough, how will they be able to pay for their rent without getting a loan, borrowing from close ones or using the high-interest rate credit card?
This is exactly a setback that we do not need in life. Now that you know of its importance, it’s imperative that you start an emergency fund as soon as possible.
In order to do so, you should record all your expenditure for a month and at the end of it, sit down to sift through it. Segment it into parts such as your rent, your groceries, etc and weed out some of the unnecessary expenditure to be put into your rainy-day account. An important thing to note about this is that an emergency fund is a separate fund from your savings!
Ideally, your goal is to have 3-6 months of expenditure in that account and once you have arrived at that goal, don’t stop saving!
With that, you don’t have to tremble in fear due to an unforeseen incident and you can face it head-on with only a little dent in your finances.
Half the Sky's mission is to supply the tools that can give every woman the ability to build a successful career and be fully prepared for the future of work. So, that they can lead a healthy, prosperous and more balanced/blended lifestyle of their choosing. By building your confidence, you’re setting foundations to empower yourself and your career. The world is your oyster, and it starts with you.
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