As they say, man proposes God disposes. Life is a collection of events and a collection of ups and downs, good times and tough times, highs and lows. It never follows a linear pattern. As important as it is to enjoy the good times, the high tides it is equally important to keep cover for the rainy days. One must be prepared for all kind of circumstances or stress and frustration will become fate. The only way to defeat hostile circumstances is to take educated informed decisions and take calculated risks considering all possible measures beforehand. Among others, financial security has utmost importance, which is provided to you by an emergency fund. As the word emergency dictates, an emergency fund is something that can be used at the time of unforeseen circumstances. An emergency fund helps you to relax and respond to the hostile situation peacefully. In short, the importance of emergency cannot be undermined and it is pertinent to build it.


Someone, unintentionally or mistakenly, may consider both terms the same, but this is not the case. Both terms have different meanings. Emergency fund saves for responding to unforeseen calamities; this may include loss of income, unplanned medical bills, emergency home, and automobile repair, the sudden death of a family member, and other unforeseen living expenses. Emergency funds are meant to cover unexpected costs and major financial changes. On the other hand, personal saving funds are usually meant to cover planned expenses, such as buying a car or a house, planning a wedding, planning education for yourself or your children etc.


Calculate your household budget
This is probably the biggest advice for setting up an emergency fund. You can only start saving up money once you start managing your household budget by tracking your income and expenses. For this purpose, you can either utilize one of the many programs and web apps available online or simply create a manual worksheet. Start by writing down your total monthly incomes in one column and note down your recurring expenses such as rent, utility bills, grocery, school fees, medicines, and clothing, etc. in another. You must also calculate how much you spend every month on shopping, dining out, sports, movies, and other recreational activities. This exercise will give you an insight into your spending habits and help you figure out how you can save some money every month. Once you are done calculating then you need to decide what percentage of money you want to allocate to savings and what percentage you want to allocate to your emergency fund.

Set Goals & keep a check
There is no hard and fast rule to save a fixed amount of money in the context of an emergency fund, but, as a thumb rule, you must save up-to enough amount to cover your expenses for at-least six months. Therefore, accumulating enough funds to cover six or more months’ worth of living expenses may be your ultimate goal, but you need to start small. Plan ahead to save up a realistic amount and once you reach that goal, double the goal and start saving more. Keep evaluating after a month or two if you are achieving your goal or not. The key here is to stay motivated.

Start saving now – Commitment, Perseverance, and Passion is needed
Saving money every month may not be an easy task for households that depend on a single breadwinner. However, it is extremely important for everyone to have some money in their bank accounts that they can access in case of an emergency. Since no one knows about the future, it is recommended to start saving as soon as possible. As mentioned above, you can start by setting small and realistic goals. Even if you can cut down your expenses to save a couple of hundred rupees every month, make sure to do so. You can also consider starting a second stream of income by investing your money in real estate stock market, prize bonds etc. you may buy stocks that give you a monthly or yearly dividend, prize bonds that may give you a lottery, you may also invest your emergency funds in real estate for instance you may buy a 3, 5, 7, 10, 20, 40 Marla residential plot or a 2, 4, 6, 8 or 10 Marla commercial plot or an apartment or a villa or a terrace home so you can cash it at the time of emergency. This strategy totally depends on your pocket size and available options but the important thing is to plan and execute.

Place your funds at easy access
As you know, emergency circumstances can happen at any time, so, your emergency fund should always be easily accessible. Most experts suggest opening separate savings account for this purpose, as you can earn some profit on your deposits and then withdraw them at any time. Considering the Pakistani market, a safe option to put your emergency fund is either a savings account, investing in real estate, buying stocks or bonds since all these are readily redeemable. So, make sure that your funds are accessible.

If this still hasn’t gotten you thinking, then nothing will, get up and act NOW.


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