Emergencies tend to strike you when you are not prepared for them at all. This is the fact that everybody knows, yet you reckon without unforeseen expenses. Savings are a must to fall back on when you are caught off guard by unforeseen expenses.
Financial experts often emphasise stashing away money but do not recommend how much money you should keep in your emergency corpus. You may find some advisors suggesting having enough money to cover your living expenses for a period of time, say, three or six months.
Being able to stash away that figure is not a cinch because, first of all, you must consistently decide how much you need to allocate to these funds every month. By the time you are able to get it done, your emergency funds have already been withdrawn due to some unexpected expenses.
Emergency corpus is nothing but a sum of money you will set aside and dip into only when an emergency occurs. It is a kind of safety net that you can use when your monthly budget does not have room to meet unforeseen expenses.
Many people try to create an emergency cushion, but they fail to put in enough money. When an emergency occurs, they find their savings are too short to help them tide over.
What are the factors to consider when deciding the size of your emergency cushion?
Just saying that an emergency cushion must have the potential to cover the living cost of at least three months is not enough. This is a vague expression. A lot of factors are out there that will affect your contribution, from how much you earn to how much debt you have to pay off.
Just picking a random figure, say, £1,000 for your emergency cushion will not help you sleep tight. The fact is that there is no single answer to this question. You will have to consider a number of factors so you get to the right amount.
- The consequences of the financial crisis
Job loss is the perfect time to turn to your emergency savings to get by. Some are lucky that they can move back in with their parents, but there are people who do not have that kind of support. Challenges double when you are a family of three or four. When the risk is high, you will have to save more money. How much you should set aside every month depends on your financial condition.
- The interest rates on your debt
If you are to tackle with your debts like credit card bills and cash loans for young people, you will have to get rid of them as soon as possible. This is because they carry high-interest rates. The more you delay, the more money you will pay on interest. Of course, in this situation, you will have to reduce your contribution to your emergency savings.
However, the situation will not be worse if you carry long-term loans with a fixed lower monthly instalment. For instance, you do not make the full payment if you have a car or a personal loan. This will allow you to set a fixed and probably a larger sum to contribute to your emergency cushion.
- The risk of your job loss
No jobs are secure, but there are jobs where chances for redundancy are too high. You will have to assess your situation. If the risk of losing a job is very high, you will have to create a bigger emergency cushion. If the risk of job loss is not so high, you can manage with little contribution to your emergency savings.
- Your income sources
Your income plays a significant factor when it comes to deciding how much you will be able to lay aside for your emergency expenses. If you have multiple sources of income and do not have a bigger family, you can easily stow away a more significant sum every month despite paying off debts.
If your significant other is also earning, it will be more comfortable for you to have a sound emergency cushion. If you have a side gig that lets you make quite handsome money along with your full-time job, you can efficiently utilise that money for your emergency savings.
Tips for building an emergency cushion
If you want to build an emergency cushion, you must be consistent with setting aside money. Here are the ways you can use to build an emergency cushion:
- Create a budget
Knowing how much you earn and spend every month is a must before deciding how much you will be able to stash away money for unforeseen expenses. Use a budgeting app to do so. With the help of an app, you can cut back on overspending and put that money into your emergency cushion. Budgeting can also help track your progress.
- Open a savings accounts
Do not keep your savings idle at your home because otherwise, you end up dipping into them for your regular expenses. Further, this will lose its present value. Therefore, you should try to open a high-yield savings account. You can also invest some of this money in safer investments like fixed deposits.
- Use an auto debit feature
You should try to link your savings account to your pay account and use an auto-debit feature. On a fixed date you choose, the money will be automatically pulled from your pay account. This will prevent you from using those funds on yourself. Your emergency savings should be the priority.
The final word:
An emergency cushion can prevent you from excessively relying on private loans. However, there are still chances that you may need to take out loans for fair credit score, but with savings you will not need to borrow a larger sum that means you will not need to pay a lot of interest.
Hali za dharura huwa zinakushambulia wakati usipokuwa tayari kabisa. Hii ni ukweli kwamba kila mtu anajua, lakini wewe kuhesabu bila gharama zisizotarajiwa. Ni lazima uhifadhi pesa wakati unapokabiliwa na gharama zisizotarajiwa. Wataalamu wa fedha mara nyingi kusisitiza kuhifadhi mbali fedha lakini si kupendekeza kiasi cha fedha unapaswa kuweka katika corpus yako ya dharura. Unaweza kupata washauri fulani wakipendekeza kuwa na pesa za kutosha kulipia gharama zako za maisha kwa kipindi cha muda, tuseme, miezi mitatu au sita. Kuweza kuweka kiasi hicho si jambo rahisi kwa sababu, kwanza kabisa, lazima uamue mara kwa mara ni kiasi gani unahitaji kutenga kwa fedha hizi kila mwezi. Wakati wewe ni uwezo wa kupata ni kufanyika, fedha yako ya dharura tayari wamekuwa kuondolewa kutokana na baadhi ya gharama zisizotarajiwa. Mfuko wa dharura ni kiasi cha pesa ambacho utaweka kando na kuingiza tu wakati dharura itakapotokea. Ni aina ya usalama wa mtandao ambao unaweza kutumia wakati bajeti yako ya kila mwezi haina nafasi ya kukabiliana na gharama zisizotarajiwa. Watu wengi hujaribu kuunda kisanduku cha dharura, lakini wanashindwa kuweka pesa za kutosha. Wakati hali ya dharura inapotokea, wao hupata akiba yao ni fupi sana kuwasaidia kufanikiwa. Ni mambo gani yanayopaswa kuzingatiwa unapochagua ukubwa wa mto wako wa dharura? "Kusema tu kwamba ""kitambaa cha dharura"" lazima kiwe na uwezo wa kulipia gharama za maisha kwa angalau miezi mitatu haitoshi." Hilo ni usemi usioeleweka. Kuna mambo mengi ambayo yanaweza kuathiri mchango wako, kuanzia kiasi unachopata hadi kiasi cha deni unachohitaji kulipa. Kuchukua tu takwimu ya random, tuseme, £ 1,000 kwa ajili ya mto wako wa dharura, si kukusaidia kulala vizuri. Ukweli ni kwamba hakuna jibu moja tu kwa swali hili. Unapaswa kuzingatia mambo kadhaa ili upate kiasi kinachofaa. - Matokeo ya mgogoro wa kifedha Kupoteza kazi ni wakati mzuri wa kugeuka kwa akiba yako ya dharura ili kupata. Baadhi ya watu wana bahati ya kurudi kwa wazazi wao, lakini wengine hawana msaada huo. Matatizo ni makubwa sana kwa familia ya watu watatu au wanne. Wakati hatari ni kubwa, utalazimika kuokoa pesa zaidi. Kiasi unachohitaji kuweka kando kila mwezi kinategemea hali yako ya kifedha. Ikiwa una matatizo ya madeni kama vile bili za kadi za mkopo na mikopo ya fedha kwa vijana, unapaswa kuondoa haraka iwezekanavyo. Hii ni kwa sababu wao kubeba viwango vya juu vya riba. Kadiri unavyochelewesha, ndivyo utakavyolipa riba nyingi zaidi. Kwa kweli, katika hali hii, utalazimika kupunguza mchango wako katika akiba yako ya dharura. Hata hivyo, hali itakuwa si mbaya zaidi kama wewe kubeba mikopo ya muda mrefu na fasta chini ya kila mwezi awamu. Kwa mfano, huwezi kulipa kikamilifu ikiwa una gari au mkopo wa kibinafsi. Hii itakuruhusu kuweka kiasi cha kudumu na labda kiasi kikubwa cha kuchangia mto wako wa dharura. - Hatari ya kupoteza kazi yako Hakuna kazi ni salama, lakini kuna kazi ambapo nafasi ya kufukuzwa ni ya juu sana. Utalazimika kuchunguza hali yako. Ikiwa hatari ya kupoteza kazi ni kubwa sana, utahitaji kuunda mto mkubwa wa dharura. Ikiwa hatari ya kupoteza kazi sio kubwa sana, unaweza kusimamia kwa mchango mdogo kwa akiba yako ya dharura. Mapato yako ni muhimu sana wakati wa kuamua ni kiasi gani cha pesa utakachoweza kuweka kando kwa ajili ya gharama za dharura. Ikiwa una vyanzo vingi vya mapato na hauna familia kubwa, unaweza kuhifadhi kiasi kikubwa kila mwezi licha ya kulipa madeni. Ikiwa mtu mwingine wa karibu pia anapata pesa, itakuwa rahisi zaidi kwako kuwa na mto mzuri wa dharura. Ikiwa una gig ya upande ambayo inakuwezesha kupata pesa nzuri pamoja na kazi yako ya wakati wote, unaweza kutumia pesa hizo kwa ufanisi kwa akiba yako ya dharura. Ili kuandaa kitambaa cha dharura, unahitaji kuweka pesa kando. Hapa ni njia ambazo unaweza kutumia kujenga mto wa dharura: - Kuunda bajeti Kujua ni kiasi gani unachopata na kutumia kila mwezi ni lazima kabla ya kuamua ni kiasi gani utaweza kuhifadhi pesa kwa ajili ya gharama zisizotarajiwa. Tumia programu ya kupanga bajeti ili kufanya hivyo. Kwa kutumia programu ya kompyuta, unaweza kupunguza matumizi ya pesa na kuweka pesa hizo katika kisanduku chako cha dharura. Pia, kuweka bajeti inaweza kukusaidia kujua jinsi unavyoendelea. Fungua akaunti ya akiba na usifanye akiba yako iwe ya kawaida nyumbani kwako, kwa sababu ikiwa haifanyi hivyo, utaishia kuitumia kwa gharama zako za kawaida. Isitoshe, hilo litapoteza thamani yake ya sasa. Kwa hiyo, unapaswa kujaribu kufungua akaunti ya akiba yenye faida kubwa. Unaweza pia kuwekeza baadhi ya fedha hizi katika uwekezaji salama zaidi kama amana za kudumu. - Tumia kipengele cha debiti ya moja kwa moja Unapaswa kujaribu kuunganisha akaunti yako ya akiba na akaunti yako ya malipo na kutumia kipengele cha debiti ya moja kwa moja. Katika tarehe ya kuweka, pesa zitapigwa moja kwa moja kutoka kwa akaunti yako ya malipo. Hii itakuzuia kutumia fedha hizo kwa ajili yako mwenyewe. Akiba yako ya dharura inapaswa kuwa kipaumbele. "Kwanza, ""kifuniko cha dharura"" kinaweza kukusaidia kuepuka kutegemea sana mikopo ya kibinafsi." Hata hivyo, bado kuna uwezekano kwamba unaweza kuwa na kuchukua mikopo kwa ajili ya haki ya mikopo, lakini na akiba wewe si haja ya kukopa kiasi kikubwa zaidi, ambayo ina maana wewe si haja ya kulipa riba kubwa.