A trip to the emergency room, unexpected home repairs, car problems, unplanned travel … pure emergencies! These are some of the unforeseen circumstances that can put a drain on your hard-earned savings.
An emergency fund can help to cover these unexpected costs without dipping into your regular cash flow or running up debt with a credit card or financing.
So how do you start an emergency fund?
1. First, understand that an emergency fund is NOT
For planned purchases like a house, new car, college education and such.
A large, unattainable amount – start with setting aside at least 10% of your net income.
A set amount for everyone – they vary according to your income, lifestyle and necessary household and family expenses.
2. How much should you save?
Whether you’re earning a monthly income or retired, you should have enough money to cover at least six to eight months of living expenses as your safety net.
3. Where can you park your emergency fund?
To ensure your savings are secure and will be readily available when you need it, seek facilities that are:
Safe from market risk. You’ll know your money is there when you need it most.
Easy to access. All to ensure you can withdraw the money easily and effortlessly.
Income-earning. Although the reason behind an emergency fund isn’t about making money, don’t deny yourself the opportunity to earn some profit on your savings.
One place you can put your emergency fund is:
Chill D Savings account
With Chill D Savings by CIMB Thai, you can enjoy high interest from your savings, with zero fees. Open your account in just 5 minutes with your mobile phone.
If your emergency fund is already sorted, you’re well ahead of the pack. If not, it’s never too late to start. Ask your financial advisor for help in finding the ideal account to store your funds. Learning more helps you prepare for those unexpected rainy spells.
This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy amongst Singaporeans. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve everyone’s well-being. This in turn, achieves CIMB’s purpose of advancing customers and society.