It’s more important than ever to have emergency savings. Let’s do it.
- How much do you need?
It’s important to build up an emergency savings fund to prepare for the unexpected, whether that’s your car breaking down or a drop in income. A rough guide for the ideal sum to have saved is the amount you’d need to cover three months’ essential outgoings. So, if you spend RM1,500 a month on mortgage or rent, food, bills and other things you can’t live without, aim for RM4,500 in emergency savings. But if this figure seems unrealistic, don’t be daunted by it. Even having just a small amount saved can help you avoid taking on debt if you face unexpected costs.
- How much can you save?
Work out how much you can afford to save each month. Go through your income and spending, there are many useful budget planners in app store (just search for “budget planner” for example).
See where you can cut back like if you can save on bills, for example, could you cut the cost of your phone bill by switching providers? This could be extra cash for your fund. Once you know how much you can afford to put away each month, try setting up a standing order that automatically puts money into your savings account each month to help you achieve your goal.
Try using less cash and instead more traceable sources such as debit cards, online banking and credit cards. This way you can monitor your money through statements and stay ahead of your finances.
- Remember, it takes time!
While you’ll want to get your emergency fund set up as soon as possible, like with all savings, it’s best to keep to what you can afford and make sure to save regularly.
Saving smaller but regular amounts are more effective than saving larger amounts now. This is because you get into the habit of saving and also avoid overcommitting too much. It can help you budget more effectively too. Or just save what you can as regularly as you can. Every bit of cash saved makes a big difference to your financial wellbeing.
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