source: http://www.serious-loans.com[/caption]
This is a continuation of the series about the 40some minute interview of Suze Orman on her second visit to the Philippines. To read previous post about this series check out the links below:
- It is not that Pinoys can’t save, they don’t want to save
- The First Law of Money
- Check Your Latte Expenses
I have touched this topic so many times in this blog(click here). As already said emergency funds are money set aside for actual emergency and not for some things that went on sale and you wanted it so badly. Emergency funds are not meant for that.
If you have seen this video interview(if you haven't click here to watch and see main notes)Suze Orman even made it strict by saying that your emergency fund should consist of 8 months of living expense. By living expenses she means money to pay utilities, for food on the table, for loans that you got to pay, and not the wants like movie, gadgets, and weekend vacations.
To reiterate as well your emergency fund should not be place in an easy access account to avoid yourself from getting it when there are such sale or any other bargains out there. Again such money is also not for stock investment bargain hunting specially in this time where the Philippine Stock Market is on its recovery mode from those plunges we experienced weeks ago.
Setting up an emergency fund is a wise move.
You don't know when will emergency hit you or your love ones. You might lose your job today. You might get sick and not be able to get back to work right away. Yo might need a huge sum of money for you love ones hospitalization due to an accident. And also in the case in the Philippines a typhoon might destroy your home and your livelihood and you need such money to get back.
ACTION PLAN
Check your budget again. See to it that you are noting all your necessary expenses and know which of those could be very important in case you lost your job or can't work anymore due to illness. Add those up and that is your living expense. Remember you need to have 8 months of living expenses as your emergency fund so always watch your spending, set aside first for this important fund.
Fitz is even more strict, I’ve read one advice he said to let it keep growing up to even two years:D
Personally, I think it’s ok to keep it in an atm savings account if you have discipline. But then again, that’s a big IF 😀
I loved her interview! I’m pleasantly surprised she really took the time to get to know some pinoys, and could talk credibly about a whole other culture.