Do you want to get your finances in order? You want to invest and make your money grow?
Stop right there. You’re heading to a financial disaster upon starting your investment without building up your emergency fund first.

Consider this, What would happen to your investment if you suddenly lost your job?
Most likely you would pull out your investment or you would borrow money. Right?

What will happen if you need cash to pay for major house repair right now or your family member has been confined in the hospital? Most likely you would pull out your investment or borrow money. Right?

With emergency fund at your side, you can prevent pulling out your investments and borrowing money.

Building your emergency fund first

Your Emergency fund is your buffer money in case something happens.

Emergency fund is like a spare tire. It will help you to continue your journey until you reach the vulcanizing shop for the repair of the flat tire.

If you suddenly lost your job today, with emergency at your side you can last for few months before you might need money and work again.

Now, how much emergency fund should you save? Preferably, it should be 3 months to 6 months worth of your salary.

Okay, now you know how much money you should save up first. How can you save that much you asked?

There are two ways you can consider doing in building up your emergency fund. First budget your money and save. Second, make more money and save.

Budget your money, you’ve got to know where your sahod goes. Recording your expenses is a must and look for unnecessary expenses you can do cost-cutting. You can make use of budgeting apps to track it.

Make more money, if possible, have overtime in your current job, sell items you don’t use anymore, sell products or services you can offer, have a side job, or anything that can bring money to your pocket.

You can also invest in learning and earn while you’re at it. How about a business in the financial industry? You can learn and understand financial instruments that can help you and your loved ones to improve your finances.

I am a proud member of IMG (International Marketing Group). It is a place that will teach you how to save, invest your money, learn how to get out of debt, learn how to protect your money, learn how to be your own money manager and lastly be in control of your finances.

Where should you put your emergency fund?

There are Four options. First, open a savings account with an ATM card. Why? For liquidity purposes. You can easily access your fund when you need it.

Second, Money market funds. Why? For beating the savings account interest rate. You can get at least 1-2 percent interest rate compared to 0.25 percent of banks. This option has it liquidity too.

Third, ATM savings account with insurance. Why? Normally, you would not spend your emergency fund why not save it on savings account with insurance, so that, when something happens you are covered.

Fourth, cash. Why? Nothing beats away cash on hand when something happens you can use it in case of emergency.

Final note

Having your emergency fund gives you assurance that when something happens. You can take care of it.

Percentage-wise. How should you diversify your emergency fund?

There’s no right or wrong way of placing your emergency fund it depends totally on you.

Let’s say you are earning 20,000 pesos per month multiplied 6 months that would be 120,000 that is your emergency fund.

You can divide it into four, corresponding to the above four places you can put your emergency fund. 30,000 each for; ATM savings account, money market fund, ATM savings account with insurance and cash on hand.

Apply what you believe will work for you.

I hope you find it helpful.

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