Almost every financial advisor will advise you to have an emergency fund in case of a financial emergency. You never know when you are going to lose your job, or face an unforeseen financial calamity. It is always good to start early. Moreover, building an emergency fund is not as difficult as it sounds.
You need not drastically sacrifice your lifestyle or haggle with service providers for reducing rates. Do not disturb the fund and use small loans from your moneylender for out-of-pocket expenses. Read some ways to build your emergency fund.
You need not drastically sacrifice your lifestyle or haggle with service providers for reducing rates. Do not disturb the fund and use small loans from your moneylender for out-of-pocket expenses. Here are some ways to build your emergency fund.
Emergency funds should be kept accessible, but not enough to tempt you to use them for daily expenses. Some people have a different bank account for emergency savings. This helps to create a psychological barrier between the two requirements. You can also go for credit unions.
You can use the GIRO system to divert a portion of your monthly earnings towards your emergency fund through automation. Ideally, 20 percent of your total income should be kept aside for an emergency. Do not rely only on your willpower. Automation also helps to keep the money out of sight.
This is especially for those earning under $2,000 in Singapore. For these individuals, dedicating 20% of the earning, post CPF, is not an option. Get an additional job or one-time freelance gigs. You can even start a small business before you start building your emergency fund. The business can be funded using a small business loan from a licensed moneylender.
As mentioned earlier, making small changes to your lifestyle would be helpful. Get your own equipment and drop that expensive gym membership. You can save from phone bills and daily utilities as well. Use public transport instead of taking cabs or driving your own vehicles. Make choices like generic drugs over prescription drugs and homemade food over eating out.
If you are single and do not have to support a family, cut down on your lifestyle and purchases for a couple of years. This can be done by surviving on half of your paycheck. This will help you to amass a large amount in your emergency fund in a short period of time.
You do not need to break open your emergency fund if your car breaks down. For all such unforeseen instances where you need small amounts of money, payday loans are useful. Just contact a licensed and reliable moneylender. The best thing is that moneylenders aren’t that concerned with credit ratings of applicants, hence the approval is quick.