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When estimating how much you need to save, these are the areas to look out for. By accounting for them in your saving goals, you’ll be well-prepared for any emergencies.
Housing: your emergency fund could include reserves for rent/mortgage, property insurance, utilities and tax. In an emergency, the priority is to safeguard your property.
Debt repayment: to maintain your credit score, your emergency fund should cover debt repayments for at least six months. Examples of such debts include credit cards, housing, or student loans. Having an emergency fund of this size prevents the interest on your loans from piling up, too.
Food: calculate how much you'll have to spend on groceries per month, assuming you dine at home everyday. Remember that in the event of an emergency, you should keep to dining at home as much as possible to reduce expenses. That means no more bubble tea!
Insurance: include monthly premiums paid on different insurance categories, such as medical, dental, disability and life insurance policies.
Transportation: your fund should also cover expenditures for travel. Include bus fares, as well as allowances for ride-hailing if you must. If you have a car and use it often, include car loan repayments, road tax, insurance, fuel and maintenance/repairs.
Personal expenses: this is a broad category that includes varying expenditures on examples such as hobbies, entertainment, haircuts, toiletries and gifts. These small costs can add up quickly, so include them in your estimates!
USES OF EMERGENCY FUNDS. COMPLETED ✅
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