“Save what you can toward the emergency and ‘life-happens’ fund. Do not worry yourself sick at the slow growth. The point is it’s growing even if it’s just one [rand] at a time.”
~ Michelle Singletary
It’s become expensive to simply go grocery shopping. If you are not budgeting in this economic climate, then you are not making it beyond a month-to-month lifestyle. This type of living is filled with radical changes in mental health. From moments of exhilaration on payday to moments of dire straits. And this is absolutely no way to live. If you need to begin budgeting and making healthier financial choices, check out our YouTube Channel, Money Moves and become part of a #DebtFreeCommunity.
Beyond changing the month-to-month lifestyle, there is the subject of the Emergency Fund. Why is it needed? How do you even begin one? How much should you save and how should you keep from spending it? Let us look at answering these questions and get you one step closer to starting your own emergency fund.
Why Start an Emergency Fund?
An emergency fund is money which is set aside for a rainy day. It protects you from being forced to take out loans to cover emergencies and it removes a massive amount of stress from your life when you know that money is there.
How Do You Begin an Emergency Fund and How Much Should an Emergency Fund be?
Starting an emergency fund can seem daunting. Especially because an emergency fund is estimated to be an average of three months salary at the very least. This is an exceptionally large amount for many people. It is for this reason that you should not look at the top of the mountain, but instead at putting one foot in front of the other. When you look again, you will have reached the top of the mountain.
To begin an emergency fund, you need to start with a budget of sorts. If you are on social media, check out our video on budgeting basics. This is the bare essentials needed to begin budgeting. Once you have put a concrete budget in place and know what money is left to save, take 10% of this amount and place it in the emergency fund. Make sure that you have paid your debt repayments as well as living expenses before you begin building an emergency fund.
Even if you only have R100 to put into the emergency fund per month, that is enough for you. Keep doing it until you reach your goal.
If you are having financial trouble in coping with your debt repayments every month and need a reduced debt repayment amount, make sure to contact our debt counsellors to see where they can assist you.