The biggest challenge with emergencies is not only are you dealing emotionally with the aftermath of the event, you are also dealing with it financially.
A large amount of the working population are waiting for their pay cheque to hit their bank account, only to spend every last penny. Only to have to wait for the next pay cheque to arrive. Unfortunately, when you live pay cheque to pay cheque; you have not had a chance to build much in savings so when an emergency occurs you do not have the financial resources to cover it.
So the question is: how do you manage your money and plan for the unexpected? It can be answered in two words – Emergency Fund.
The basic purpose of an emergency fund is to tide you over and cover the financial gaps, which include unexpected expenses or unexpected loss of income.
For example, you just found out you are going to be made redundant, or perhaps your car breaks down, or you just realize your child’s university is more than you expected and the bill is due by the end of the month. Those are all possible examples of an emergency.
We suggest that you begin to build an emergency fund that should be large enough to carry you through three to six months’ worth of household expenses. If you have a job that is commission based, you should look towards saving an amount equivalent to eight months of household expenses
Article published in Bernews, August 9, 2016