Protecting your family’s finances is one of the biggest priorities that most of us have. However, it’s easier said than done for most people across the world, as basics such as food, water and education come first when money is scarce. Getting health or life insurance isn’t treated with as much importance in the Philippines as in other countries largely due to cost, which is scary.
Without insurance, you might wonder what to do if the head of family became seriously injured and where to turn to for help. In some countries, services on offer at Nowinnofee.net might be useful, but aren’t so over here, and government support in the form of benefits is minimal at best. This leaves people in the Philippines with two options: buy an insurance policy for your family or start saving for an emergency fund.
What is an emergency fund?
Reading articles about financial freedom, I learnt about these funds, and the difference between them and normal savings funds. The main one is that, as the name suggests, they’re for emergencies, when something goes wrong like injury or severe illness. Our family already has a savings fund, where we put money aside for holidays and home improvement, so we already know how to save money.
You could use the fund in the event of an accident, when you need to pay for medicine or healthcare, as well as other basics like food if
you have to leave your job. The fund is useful if your family doesn’t have health insurance.
How to save for an emergency fund?
This can be difficult. As we already save money for holidays, and just spent all out money on our summer vacation, we have to start over again. However, this means we can look at what we can save. We look at what we spend money on, and try to cut costs and use whatever’s left to put into the emergency fund.
Ideally, you should know how much you want to save. Just to be sure, you should save up at least three months’ worth of expenses, although if you can manage it, save up six months’ expenses. At the moment, we still haven’t saved for one month yet, but we’re making progress. Next week, we’ll look into how you can ‘pay yourself first’ as part of our Budget101 series.