You’re Adulting, But Are You Emergency-Proof? 🧐

Happy Election Day, everyone! I hope you all had a smooth experience casting your votes. Without further ado, let’s dive into this Monday’s issue.

Life doesn’t always go as planned. Whether it’s a sudden job loss, a medical emergency, or your laptop crashing the night before a big presentation, surprises can derail your finances fast.

That’s where an emergency fund comes in.

Think of it as your financial buffer. It won’t make life’s problems go away, but it will keep you from going into debt.

In today’s edition, we’ll go over:

• Why you should build an emergency fund

• How much emergency fund you need

• How much to save per month

• Where you should deposit your emergency fund

TLDR;

The Bottom Line

• Set a monthly savings target (10%–20% of your income)

• Park your money in a high-interest, accessible account

• Aim for 3–6 months’ worth of essential expenses

• Automate your savings

• Rebuild it whenever you use it

The content

💡 Why do You Need an Emergency Fund? 

“Wouldn’t it make more sense to just invest my money right away instead?”

Your emergency fund must come first before any investments. 

Besides protecting you from debt, an emergency fund keeps you from touching your investments should life happens. It gives you financial breathing room, so one surprise doesn’t ruin your entire budget or set you back for months.

More than that, it gives you choices. You can leave a toxic job. You can say no to a bad freelance client. You can wait for the right opportunity and not just the next paycheck.

📊 How Much Emergency Fund Do You Really Need?

The golden rule: 3 to 6 months’ worth of expenses.

Let’s break that down:
If your monthly expenses (including rent, bills, food, and transport) total PHP 20,000:

• 3 months = ₱60,000

• 6 months = ₱120,000

If you're freelancing or have variable income, aim for closer to 6 months. The more uncertain your job, the bigger your cushion should be.

💸 How Much Should You Save Per Month?

Start with a realistic, consistent amount, especially if you’re just beginning your career. A good target is 10%–20% of your monthly income.

For example:
If you earn PHP 25,000/month:

• 10% = PHP 2,500/month

• 20% = PHP 5,000/month

Set up an auto-transfer to your emergency fund right after payday. Many banks have this feature. There’s less friction to save because the money is gone before you even get to spend it.

🏦 Where Should You Park Your Emergency Fund?

Your emergency fund must be safe and easily accessible. This means no to high-risk investments or locked-in savings accounts. 

Don’t put your emergency fund in crypto, stocks, or mutual funds. These are great for long-term growth, but not for emergencies.

Here are solid options:

• High-Interest Digital Savings Accounts
  GCash GSave (via CIMB or BPI), Maya Save, or SeaBank offer interest rates far better than traditional banks and are fully insured by PDIC.

• Short-Term Time Deposits

  Park your emergency fund in a 6-month time deposit for a 4-6% annual interest. Digital platforms like Tonik and Maya allow you to withdraw your money from the time deposit without any penalty. Once the time deposit matures, simply open another one to keep the same interest rate. 

Tip:  If you’re building a larger fund and won’t need it all at once, you can split it. Keep a part in a digital savings account, and deposit the rest in a 6-month time deposit. This also gives you a bit more diversification.

You Should Probably Hear This…

3 Surprising Truths About Emergency Funds

1. It’s not a one-time goal. You’ll probably use and rebuild it multiple times.
   Don’t be discouraged if you spend it. That’s what it’s there for. The key is to replenish it right after.

2. Credit cards are not emergency funds.
   Credit means debt with interest. You’ll be digging yourself a deeper hole if you rely on it. 

   An emergency fund gives you freedom, not obligation.

3. You can start small and still succeed.
   Even PHP 500 a week adds up to PHP 26,000 in a year. Consistency beats perfection. Don’t wait until you earn more to begin.

Building your emergency fund is the first real flex of adulting. It’s not flashy, but it’s powerful. It gives you peace of mind and the ability to protect yourself from financial stress.

Liked this issue? Let us know! We appreciate all your comments 😁 

Stuff Worth Sharing

The Link Lowdown

• The Psychology of Money: Timeless lessons on wealth, greed, and happiness - I’ve read this back in 2022. Great read about how our environment influences how we think and behave around money.