Build emergency fund for the unexpected…

It can be traumatic facing an emergency without an escape route. Of course it could be seriously disgraceful, and this is where building an emergency fund becomes very important.

An emergency fund is money that you have set aside to specifically cover any unexpected expenses that may come up. An emergency fund may cover unexpected car repairs, medical bills or other emergency situations.

You may also use an emergency fund to help pay your bills when you are unemployed. You should also prepare for unexpected events with a solid plan in addition to your emergency fund, according to Miriam Caldwell, personal finance specialists.

Experts believe that one of the best ways to face life’s challenges is to be financially prepared with an emergency fund, and to be debt free.

They said creating emergency savings account is the very key because you must have what is called fall back, so that when that time comes, you need to go back there because at that time you already have saved some money.

“When we say emergency, it is a short notice and if there is nothing like that there is no way you can meet that emergency. So I will encourage people to cultivate the habit of saving so that when that time comes they have something to fall back on.

“If people have that they will be able to have access to more funds. If somebody has a deposit of N100,000, in our sector, I assure you we will do three times that. But is somebody has zero deposit, he will just get zero support. So one of the major benefits is that that fund can be increased to three times when the customer comes,” one of the experts said.

Caldwell said emergency funds should be held in an account where you can access them fairly quickly. This would include a good money market account or a high interest savings account.

According to her, it can take some time to build up your emergency fund. It is important to remember that you are saving up to cover your expenses, and not your income.

For example, you will not be putting money into savings when you are laid off from work. You can also cut back on many of your expenses to make your money last longer.

You may want to set up a skeletal budget now, which will show you the items you need to cut out immediately if you were to lose your job. This will make doing it easier, and give you one less thing to worry about as you work to bring your income back up.