ARE YOU SAVING TOWARDS THAT EMERGENCY FUND?

Company lay offs, medical needs, home repairs are just but a few examples of emergencies that happen when
you least expect Them
In life you should expect the.
unexpected , and this is why you need
an emergency fund . The best you can
do is to prepare for emergencies that
require access to additional money
and having an emergency fund is the
ideal solution .
The very last thing you want
to do when you are faced with such emergencies is to be forced to rely on credit cards or loans which could simply compound the problem.

HOW BIG SHOULD YOUR EMERGENCY
FUND BE?
Most experts agree that you should
keep between three and six months
worth of your living expenses set
aside in your emergency fund.
Depending on your specific situation
and whether or not you have children ,
carry substantial debt and types of
insurance coverage will determine
what amount is best for you.
The reason you want to have three to
six months of expenses saved up is
that the most common reason for the
need of an emergency fund is due to
a sudden loss of income . If you or
your spouse loses a job you still have
bills to pay and it may take a few
months to find suitable new
employment . It is best to plan for a
worst- cast scenario so that the smaller
emergencies such as replacing the hot
water heater that just went out will be
easily covered.

START SMALL
If you currently don’t have an
emergency fund or find it difficult to
save money the key is to start small.
You have to realize that accumulating
one month’ s worth of expenses will
take some time, let alone three to six
months. If you set your immediate
goals to be small and manageable you
will have a better chance in reaching
them .
The best way to get started would
probably be through your bank. Open
up a new savings account if you
currently don ’t have one and begin to
save with this first. The next step is to
get into the habit of making regular
deposits into this account. Whether it
is weekly, bi-weekly or monthly, create
a schedule and stick to it . Once you
make saving automatic you won ’t even
have to think about it .
If you feel it is difficult to begin saving
simply start with a small amount .
Maybe you begin with Kshs 700 a week
initially . While this won ’t amount add
up all that quickly the important thing
is to start putting something away and
to make it a habit . After a few weeks
you won’t even notice that Kshs 700 missing so you can increase it up to Ksh 1050 or Kshs 1400
after a month or so. You will begin to
get used to that money not being
there and can slightly increase it
again .

WHERE TO KEEP YOUR EMERGENCY FUND
You should start with a savings
account because it is simple to use
and generally does not cost anything.
The convenience factor is what is
important when getting started . As
your account grows you will want to
find an account that can earn
reasonable interest so that your
money is working for you. The next
best options to look into are money
market accounts or certificate of
deposits ( CDs).
It is important to keep this emergency
fund in a place that will fairly liquid so
that you can get to the money quickly
in the event of an emergency . You
also don’t want to have this money
tied into stocks or mutual funds
because the volatility of the market
could cause you to lose money over
the short - term.

So have you started saving towards that emergency fund?