Can You Stand The Rain?

Tulix Team

Jul 4, 2023

You know the phrase “Life happens!”, or one of its many variations, right? When crisis strikes, an emergency fund can make the difference between being completely stuck and having a softer landing. It means life happened and you were prepared.

And no, takeout isn’t exactly a crisis but here are some scenarios where an emergency fund comes in handy:

1. Sudden illness

2. Losing a job

3. Giving yourself work flexibility

How to Build an Emergency Fund

An emergency fund is where you set aside money that covers your regular expenses for at least six months depending on your circumstances. If you have other people relying on your income to a great extent, you can aim to go as far as 12 months.

Why is it important?

• It eases financial stress during a crisis;
• It helps you tackle financial emergencies without going into debt;
• It helps you avoid selling off your long-term assets to handle an emergency;
• It helps you build a saving culture.

You’re probably wondering, “Does an emergency fund include savings?” It is a form of savings but you don’t want to misuse it when there’s no emergency so put it somewhere you won’t ‘see’ it every day. Money Market Funds are good for this because your money earns interest and withdrawals from such funds are generally quick by virtue of the types of assets they hold.

Always allocate money to your emergency fund when budgeting until you hit your target. Keep the amounts realistic so you can comfortably add to your fund every month and save unexpected income like bonuses and gifts in this account too. Remember, every penny counts.

Using Your Emergency Fund Doesn’t Make You a Failure

Yes, an emergency fund helps us stay afloat during a crisis but it’s still heartbreaking watching something you spent months building shrink at a moment’s notice. Especially if you’re hit by one emergency after another and are unable to rebuild this fund.

When stashing away for a rainy day, deep down you’re hoping to never use this fund. So, not using it can quickly become a badge of honour. But when that time comes, it’s important to accept that it is a rainy day fund and there’s a storm raging at that moment.

So when the guilt shows up try to remind yourself that it was, in fact, an emergency when you dipped into these savings and thank yourself for having prepared.

Building an emergency fund takes discipline and it’s a wonderful habit so you should be proud. It’s not easy but you did it anyway and you can do it again when you have more income because you understand its importance.

Sometimes life hits you left, right and centre and you wish it could just give you a break. The “break” could be an emergency fund.