Legitimate Tips and Techniques to Start an Emergency Fund

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Saving is probably one of the most difficult things to do. Considering the fact that bills are in every corner of the things we do, saving money might seem like a dream to most.


Tips on how to start an emergency fund
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It is imperative, however, to have an emergency fund. Many of you might not know what an emergency fund is but don’t worry, we will, in the simplest form, try and let you understand what an emergency fund is. Moreover, we will give you techniques on how you can start an emergency fund even if you are at a low monthly income rate.

Emergency fund vs. Savings

Although it technically is the same, an emergency fund is not to be used unless it is an “emergency.” Instances like unemployment, medical-related issues, a broken car part, home renovations, these things are what emergencies are.

Read: Best Finance Applications for Budget Management and Investments

Savings, on the other hand, is the type of fund that you use for something specifically. A vacation, a new car, a new business, new cellphone—you get the point.

So although would require you to put away money, both of them are two (2) completely different things.

How much should an emergency fund be?

Emergencies include losing your job; where you can have no income for a few weeks to a month depending on the situation.

Ideally, an emergency fund should be somewhere between three (3) to six (6) months worth of your monthly income.

Read: 10 Money Habits Every Filipino Should Stop Immediately

For instance, if you earn P20,000.00 on a monthly basis, a safe figure to have as an emergency fund is somewhere between P60,000.00 to P120,000.00.

However, that figure is incomparably high considering the fact that the prices of goods and commodities went up while the monthly income was left as is.

Which is why we figured that an emergency fund is a variable that is dependent on the following of a specific person:

  1. Lifestyle
  2. Hobbies and interests
  3. Situation

Nevertheless, it is safe to finally conclude that an emergency fund should be at least two (2) months worth of income.

How can you start an emergency fund?

Help in starting a savings for emergency fund?
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This question is something we see that is thrown a lot of times; how do you start saving money? How do you budget? What are the basics of investing?; are the corresponding questions that are normally asked by people who want a change in their financial direction. Many people find it difficult; some people find it easy and manageable—the sole answer lies on how you look at it an how disciplined you are.

Searching for this online can allow you to find a couple of answers; but all of those are generic. We have prepared a few legitimate ways on how you can start an emergency fund.

Read: Money saving Tips: The 52-week money challenge

Discipline is the first step

In almost every aspect of your financial goal, discipline is the first and initial step to success. Discipline towards how you spend, what food you eat, vices, and other things would dictate whether or not you can be successful in saving money.

Controlling your needs over your wants can be an effective method to serve as a guideline on how you can start an emergency fund.

Do little steps and by one step at a time

Adjusting to putting away a part of your income could be challenging at first but once you get used to it, it’s as easy as 1-2-3. Try to do it one step at a time; make it somehow a normal part of your budget. Once you get used to this procedure, you won’t mind it eventually.

Read: Saving Money For A House Down Payment In Less Than 2 Years? Here’s How

Try and save up a few hundreds to a thousand pesos every time you receive your income. If you are paying for a loan or payable of some kind, it might be difficult at first—so you can start or by putting off little by little amount.

Find the best place where you can keep it

You need to decide where you want your fund is to be kept. This is an essential part on how you can start an emergency fund because you need to keep where you can easily access it in case, of course, of emergency.


One of the best options is to have a savings account. By placing it in a savings account, you can easily access it; you can monitor it online; and you can even do transactions with other people without having to go to a branch.

You can find out more information and helpful tips on opening a savings account here.

Find other streams of income

Read: High-Paying Part time jobs in the Philippines

Having a job is, of course, an important ingredient in this tool. But getting another source of income can be an additive.

Imagine having another stream of income, wouldn’t that be a big aid on your finances?

Having a business that can provide passive income can also help you structure that emergency fund you have been looking for.

You can read this to find out more about passive income: What You Need to Know About Passive Income

Budget properly

An effective way to do budgeting is by listing down your cashflow and minding the difference (this is your extra cash, your liquid). List down the following:

  • Your income
    • Sidelines (side income)
    • Passive income (if there are any)
  • Expenses
    • All utility payables (electricity, water, rent)
    • Food and water
    • Transportation
    • Miscellaneous (movies, dinners, vacations)

Once you got all of those listed down, calculate the difference and that’s what you have. Now, in budgeting, you need to ensure that you allot at least 20 percent in savings (emergency fund).

See this budgeting technique here: A Deeper Look at the 50/20/30 Money Saving Rule

Establish a pattern of saving

When you get the hang of it, putting away a part of your income for your emergency fund will become muscle memory. You can, therefore, have hints on what type of pattern or technique you can do so that you can either maintain your regular contributions to your emergency fund—or how you can increase it for your own benefit.

This pattern shall serve as the benchmark of your technique in putting away bits of your income for other purposes like savings, investments, and the like.

Read: A Financial Advisor’s Personal Saving Tips To Achieve Financial Goals And Success

Make it seem “automatic”

When you get the proper flow, you will not notice that you are making appropriate contributions to your emergency fund regularly. If you have any tool or app that can schedule a transfer from your payroll account (where you get your income) to your emergency fund account, you can do it when you have already made adjustments to your lifestyle accordingly.

Do note that when the time comes that an emergency arises, do not prioritize putting something in your emergency fund if you can utilize that figure to go and amend the emergency.

It is in your best style and thinking how you can benefit even in times of emergencies.

Should there be a goal if I start an emergency fund?

The goal that most investors and financial advisors talk about would only be effective when you’re used to making regular payments to your emergency fund. If you are just starting, setting a goal might seem difficult and unattainable. Although some people use that as fuel for them to be motivated in maintaining or exceeding what they can do.

Read: Passive Income Ideas: 9 Basic Businesses You Can Start Today

The usual goal, as we mentioned, should be at least two (2) months worth of your income. But upon reaching that goal, of course, you can make adjustments that would be beneficial for you even in times of dire need.

Three (3) to six (6) months worth of income is the ideal figure you should attain so that it’s efficient enough even if multiple problems hit you.

Should you not need the emergency fund, you can go with your own gut as to how you spend it if you choose to. Of course, this only applies to emergency funds that are beyond expectation and if no real danger is observable.

Nevertheless, an emergency fund should and shall only be used for emergency purposes ONLY.

Read: Saving Money Tips for Teenagers

Are you having trouble starting an emergency fund? Are you part of the demographic who are clueless on how it works and how to start it? Don’t worry, you’re not alone. In fact, most Filipinos are not prepared when disasters hit them and this is why they panic and tend to bank on loans which just delve them deeper into the paycheck cycle.

Having an emergency fund can help people financially, emotionally, and psychologically should they need it. Now, do you have an idea on how you can start your own emergency fund? Do you think that you can give it a try even with the conditions you currently have?


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