Creating An Emergency Fund
Updated June 25, 2023 by Admin_FTA
An emergency fund is your financial safety net for unexpected events like job loss, medical bills, or car repairs. Aim to save 3–9 months of expenses and start small with consistent habits to build long-term security.
Why have an emergency fund?
An emergency fund is like the fire extinguisher you keep at home. You hope you’ll never have to use it—but when there’s a need, you’re glad it’s there.You may need your emergency fund if the unexpected happens:
i. Job loss
ii. Car repairs
iii. Medical expenses
iv. Home repairs
v. Unexpected travel requirements
vi. Unexpected bills (tax or other utilities)
How much should I have in my emergency fund?
Aim to have enough in a savings account to cover 6 months of expenses. Everyone’s situation is different, so you can adjust that number based on your circumstances. These are your monthly expenses:3 Months
Aim for this if you have no children or others depending on you and an easy-to-replace job
6 Months
Most people should aim to have 6 months of expenses covered in a readily accessible account
9 Months
Aim for this if your income fluctuates (especially if your job is highly dependable on commissions)
Tips to help you build your buffer
Saving even RM50/week (that’s RM2,600 a year) is a great start.
• Use credit wisely – Track your spending to be aware of what you have
• Curb impulse buying — stick with your list
• Avoid fees (late charges, minimum balance, ATM fees, etc.)
• Plan ahead for big purchases
• Avoid cash advances
• Use direct deposit
• Jump start your savings with a tax refund or other windfall
Author - Samantha
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