Many people in Singapore fail to plan for their future. Having financial security is crucial for everyone. Having emergency funds can help you have peace of mind. This is because you can look forward to the future with no worries so you do not feel unprepared for any unforeseen expenses.
Emergency funds are important to your family’s financial security. Through finding out more about this fund will help people better prepare. They will also start saving for those who have not done so already.
The What And Why For The Fund
This type of fund is basically money that has been put aside. The aim is to later cover life’s unforeseen events. The emergency fund will let you live for several months in case of a job loss. Or when unexpected event crops up that may cost you huge amounts to cover.
Consider it to be like an insurance policy. Instead of paying monthly premiums to insurance companies. You are, however, are putting aside some money for yourself that can be used at a later date. This money can then you and your family. This money can come in handy when unforeseen events occur.
Even then there are options available for you. To help you out an alternative would be taking out a personal loan. You could also use the payday loan from legal moneylenders in Singapore. Although this direction might not be the most ideal. But it truly will go along way. The loan amount will help you deal with your current issue. Thus it will get solved a lot faster as compared to the other options like the banks.
Deciding on an Amount
Financial experts and most banks advise that you need to save some cash. This should be about 3 months the value of your salary towards your emergency fund. In so doing, in case you lose your job, you will have sufficient cash to cope. This should sustain you for several months before you could find another job.
Even then, based on your income level and preferences, the fund amount will vary. First, you will need to calculate your monthly expenses to know the exact figure. Work out the amount you spend every month on rent or mortgage. Also calculate what you spend on groceries, vehicle expenses, and utility bills.
When you have some insurance policies which will cover you. Especially when you are facing unexpected emergencies. Then you can manage with a bare minimum. Even when you have family that can support you during the financial downtime.
It is advisable that everyone makes a point to set aside some money. This should be intended for the emergency funds. This will help you later for the unforeseen expenses.
How To Build Your Emergency Fund
There are no shortcuts when it comes to saving up for your emergency fund. This boils down to several factors. These are individual discipline, your financial status, and your determination too. An emergency fund could take a rather long time to grow. That is when your monthly wages are acceptable.
Yet your monthly expenses are rather high. Bearing that in mind, realize that everyone has got to start from somewhere. Therefore, it is important to start growing the fund. This is because it is difficult to predict any emergency events.
Given that for example, that you earn a set salary of S$4,000 each month. However, your liabilities use up a total of S$3,000. This will leave you with an amount of about S$1000 every month. This is what you is to go towards the emergency fund.
Based on this for you to have 6 months’ the sum of your expenses to grow the emergency fund. Then it means that you need a minimum of S$18,000. Thus you will need 18 months of savings to grow it by putting in S$1000 each month.
What Your Emergency Fund Should Cover
When a job opportunity comes your way. You will not want to have to turn it down. Simply because you will not afford the move from one state or city to another.
Most of the people in Singapore are covered by MediShield. Thus they are able to utilize Medisave. However, you may have to take a personal loan offered by moneylenders. This will help you pay off the expensive medical bills. This mostly depends on how long you stay, the conditions, and class of the ward. With all that is is easy to drain off all your savings.
There are some home renovations cannot wait. Broken water heaters, leaky roofs, old cooling and heating systems that do not work. Some of the home repairs may not be covered by insurance. Thus that leaves the responsibility for them to you.
Also, most Singaporeans carry high deductibles for their policies. Thus even though you hold insurance, it is a good idea that you come up with money for the essential repairs.
Most experts often recommend this as the first reason to have an emergency fund. Although you may lose your source of income, the bills still need to get paid. That includes mortgage/rent, food, utilities, car payments, and the credit cards minimum due amounts.
An individual and family need to be prepared for the for the unexpected. Home repairs, Medical emergencies, retirement and auto repairs are some reasons for having some emergency fund. Most people will want to have sufficient savings at retirement, to live comfortably.
Having Social Security does not guarantee that you will have enough funds to enjoy retirement. But, when you start making preparation now. Then you get to look forward to your retirement.
An emergency fund is important for your health. Having to live in fear that you are not secure for the future. it will only cause you unnecessary stress. Getting stress may lead to numerous health issues. Additionally, health issues might lead to loss of income.
Hence, an emergency fund will help you eliminate this stress. This will allow you to lead a more comfortable and peaceful life.