What Is Emergency Fund?

The earthquake that occurred in Sumatera Barat (West Sumatra) has caused many deaths and injuries, and among them there are our brothers. The condition of this natural disaster is not predictable and certainly not by anyone we want, but the fact other than non-material losses that are priceless, the material losses were said to reach trillions of rupiah. For victims, victims' families, and sympathizers outside West Sumatra, this is the time emergency funds can play a role.

Emergency fund is a fund allocation should be one of the basic financial goals of each person. Useful especially to cover urgent needs, but not yet budgeted aka incidental, especially if the wage earner got laid off, or liquidation of a company or business losses.

But the development of emergency funds are also useful for many things such incidental and emergency if they are not achieving the target of education funds when needed, the excess cost of vehicle services, needs renovation leaky roof, until the unfortunate financial support for death or medical support, clothing -food-board because of natural disasters that happened recently.

Emergency funds are generally calculated based on a certain scale. According Klab KeluargaCerdas123, emergency funding is determined based on the consideration of marital status, routine monthly expenses, and income patterns. Required for single people to routine monthly expenses 4x, 6x married without children, married with one child 9x, married with two children or more 12x, 12x retirees, and 12x freelancers.

Is there a savings fund allocation that has not got a specific financial goals? Now this could be converted to an emergency fund first. Klabers can open accounts in the form of emergency fund investment products and illiquid nature more secure. Examples of these products are savings accounts, deposits and money market funds. If the initial emergency fund is still below the ideal targets, have to calculate the deposit Klabers investment per month in accordance with its funding has been calculated. It should be remembered that investment principles also apply here, the greater the amount of deposit per month and more often we put up the faster our emergency fund will be achieved. But the characteristics of the emergency fund should be liquid resulting returns are not too large, so increasing the return is not the main option in this case.

The challenge for you and me? Consumer habits in the first sequence table challenge everyone. People used to dig and cover the hole with a credit card. This is equivalent to storing real time bomb. Then the next challenge is the habit of delaying the work. We're talking here about self-discipline. Discipline aside emergency money if funds are still below target, so the need to periodically invest to reach the ideal target of an emergency fund.