Savings are important. Emergency fund is just as important. What is an emergency fund? Emergency fund is saved money that is collected and only used in pressing situations. There are often cases where a person has no money to cover sudden and urgent expenses. Emergency fund can be a protection against this type of risk.
Live a more peaceful life by considering the 5 benefits of setting up an emergency fund below.
Free from Debts
In life, there are many unexpected expenses that can happen. Common examples are broken household equipment, illness in family, or children's school fees. However, some people can also be in debt because of their inability to manage finances. Setting up an emergency fund will prevent you from borrowing money, whether from friends, family, or even loan sharks.
Ready for Crisis
One of the advantages of an emergency fund is protection against a crisis that may occur. Crisis such as an economic crisis, threat of layoffs, accidents, or hospital costs could happen anytime. Preparing an emergency fund is important, so that you are prepared to pay for urgent cases.
Even worse, there could be an economic crisis or world crisis that has a bad impact on your source of income. Emergency fund can be used to support your and your family’s daily lives for several months to years until you can finally return to work with a normal salary. It also guarantees a comfortable life in all conditions.
Financially Secure
Related to the two previous points, the financial condition of you and your family is also guaranteed by having an emergency fund. Do not be misunderstood, emergency fund is different from savings. Savings are useful when you want to buy something, such as a house, car, or vacation expenses. But, it is quite different from an emergency fund.
Emergency fund ensures your savings that you have prepared remained safe. That is, when things happen, you do not need to take money from the savings. Just use the emergency fund that have been saved. That way, expenses can be managed and dreams can be achieved.
Better Investment
Investment is now increasingly popular because of its ability as passive income. Setting aside a small part of your salary for an emergency fund is also useful for those of you who want to be involved in the investment world. There is still a risk of loss in every type of investment made, given the existence of the principle of risk and return.
Emergency fund is useful when you want to set aside money for investment. Even though there are sudden expenses that must be paid immediately, you can still make investments as usual without disturbing your daily needs or even savings.
More Productive on Work
Which type of person you are: works for a living, or lives for work? Whichever the answer, most people are stressed at work because they only focus on their spendings every month. Not to mention the needs that are increasingly expensive, which can exceed the monthly salary.
Having an emergency fund impacts both your effectiveness and productivity at work. No need to worry about sudden expenses, emergency fund that have been collected can be used to pay these costs. You can work more comfortably without the any additional stress.
Tips for Collecting Emergency Funds
After seeing the many benefits of having an emergency fund, it is time for you to apply these clever tips so you can set up an emergency fund. The first thing to do is to manage your finances. Start by reducing expenses and setting aside at least 10% of your salary as an emergency fund.
Next, open a new account specifically for saving emergency fund. Permata Bank has various types of savings products that you can use according to your needs and, of course, with more benefits. You can now easily open a Permata Bank saving account through the PermataMobile X application. Simply #stayathome, without going to a branch office.
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