Why having an emergency fund if employed

Below are some of the basics you stick to when setting an emergency savings account.

08:32 02 February 2014

Most people fall into the trap of thinking that money will keep flowing into their purses and neglect to prepare. When you are employed, you have a sense of security. Even that sense of security has its limitations. Job cuts will always be there and you might find yourself on the guillotine. So how do you stay above water if and when this happens? An emergency fund!

 

An emergency fund is where you have savings up to six months or longer. This fund should always be at the corner of your mind when you are looking to keep your head above water. It is a must for everyone regardless of employment status. 

 

With that in mind below are some of the reasons that you should put this savings fund in your stand orders.

 

• These saving will ensure that you have something to tide you over for a long time until something better comes along. The last thing that anyone wants is to be left clutching at straws when the reality that no money is coming through set in. 

 

• It inculcates a savings culture in you. If you did not save before, then you should start now. A portion of your salary goes into the account. Little by little, this portion becomes bigger and so does your sense of security. 

 

• Setting up the account- 10% of what you earn should be channelled into a bank account. Set up a standing order with your bank. Put it in a separate account and leave it there without touching except for emergencies.  At the end of the day, you should increase your contribution to this savings fund.

 

The above key steps will ensure that you are resting easy when disaster comes looming.