No one loves saving up a sum of money only to spend it on an unpleasant experience. The list of possible emergencies where your emergency funds need to be utilised is long, ranging from medical bills, major car repair to the loss of a job.
Liquid cash savings ensure that life goes on as per normal when disaster hits. It is the best way you can prepare yourself for these unexpected shock that will take its toll both mentally, emotionally and financially. This is why in times like this, an emergency fund is essential.
Yet, despite the importance of savings, Singaporeans are simply not saving enough. According to Singapore Business review, most Singaporeans aged 20-35 years old are just one missed payment away from a financial disaster.
In this article, we want to get you started on ways you can build up your emergency fund as soon as you can, especially for those who have just stepped into the workforce.
Recognising it’s importance
Before attempting to save up for your emergency fund, you must first recognise the importance of it. Saving up requires discipline, and by understanding the reason behind the need for an emergency fund, you will be more motivated to do so.
You will then need to set an obtainable target and work towards it. The target differs for various individuals, but a recommended sum to look at for a start will be six to nine months worth of expenses to cover your spending in the event of a loss in job.
Creating an account just for it
Create a separate savings account for your emergency fund and then leave the ATM card at home. Don’t ever touch it unless it is an emergency.
Isolating your emergency fund and going through the trouble to make it less accessible reduces the risk of careless spending. The more you make the money in that account harder to access, the less likely you would use it unnecessarily. This hastens the pace of you getting to your targeted amount.
Automatic crediting of money
Payday. That one special day working adult look forward to each month. Allocate a fixed percentage of your salary to be credited to your emergency fund each month and stick strictly to it. If you have difficulty doing so, make the entire process automatic.
Keeping track of your monthly expenses and finding out how much more you can save is a healthy habit. It goes without saying that the more you save, the faster you can reach the targeted amount of money. We recommend using a budget tracking mobile app to aid you in this.
Treat it like a game
You can add a little fun to this process of saving up. Challenge a friend to see who can save up a certain amount the fastest. Or it can also be a challenge to yourself to reach a saving of SG$500 in the shortest time possible. Once that target is accomplished, set another short term target. The process of challenging yourself does not only give you a sense of satisfaction when you accomplish each task, it also helps you accumulate a huge sum of savings without even you knowing.
Get started now!