Again, what is my emergency fund for?
1. To cover those UNEXPECTED medical expenses. Maybe because of problems in insurance claims and etc.
2. To cover my monthly expenses in case I get laid off from work.
3. Really, to cover those UNEXPECTED expenses.
I will initially assume RM2,000 per month worth of expenses. So, here are my beginning targets:
- Target 1: To achieve 6 months worth of monthly expenses. Thus, RM12,000 needs to be in the emergency account.
- Target 2: Once Target 1 achieved, aim for 12 months worth of monthly expenses. Thus, RM24,000 needs to be in the emergency account.
Sounds simple huh? Well, there are few things that I need to remember. They are:
– I need to be disciplined enough to not touch the money unless it was ABSOLUTELY NECESSARY
– The first target is the bare minimum that needs to be achieved and it needs to be achieved as quickly as possible.
– If my monthly expenses go up, then I need to increase the balance in my emergency account.
– It would be absolutely important to not go over my monthly budget.
I’m currently halfway through on my first target.
Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.