Through this, of course you will begin to realize the importance of saving a certain amount of funds in case something undesirable happens. These funds are often known as emergency funds.
However, there are still many people who don't know the importance of an emergency fund and what the ideal amount of emergency fund is.
However, don't worry. This article will explain the ideal emergency fund in detail especially for you. Come on, check out the following article to find out more.
Key Takeaways:
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Emergency funds or often called emergency funds are a number of funds prepared deliberately to anticipate various kinds of unexpected emergency conditions and require cash.
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Tips and tricks for collecting emergency funds, namely determining the target amount of ideal emergency funds, setting a time target, creating a separate account.
Understanding Emergency Funds
Emergency funds or often called emergency funds are a number of funds prepared deliberately to anticipate various kinds of unexpected emergency conditions and require cash.
These emergency conditions can include illness, accidents, natural disasters, layoffs, and many more. No one can predict this accurately. Therefore, saving an ideal emergency fund is an important thing you need to do.
You can set aside an emergency fund every month. Try to keep emergency funds in an easily accessible place so that we can use them when an emergency occurs.
However, easy access doesn't mean you can use it for fun. It's best not to use your emergency fund unless it's in an urgent situation. You can also save an emergency fund with separate spending money.
Ideal Emergency Fund Standards
Emergency funds have certain standards to be ideal. This aims to ensure that the emergency funds can function as a financial buffer in overcoming emergency situations. The ideal emergency fund depends on the individual. Usually people divide it based on the dependents they have.
These emergency conditions can include illness, accidents, natural disasters, layoffs, and many more. No one can predict this accurately. Therefore, saving an ideal emergency fund is an important thing you need to do.
First, for those of you who are single or not married, the ideal emergency fund is three times your monthly expenses. For example, if you have a monthly income of IDR 10 million with regular monthly expenses of IDR 7 million, then the ideal emergency fund you need to set aside is IDR 21 million.
It's different if you already have dependents or are married. You need to have an ideal emergency fund with a minimum of six times your monthly expenses. You can set the ideal emergency fund figure for layoffs, namely three months to twelve months based on the assumed time period needed for someone to look for a new job if an emergency situation occurs. Simply put, when someone is laid off, the emergency fund can be used as monthly expenses.
Tips and Tricks for Collecting Emergency Funds
Having an emergency fund is an important thing you must do. You can collect emergency funds with the following steps:
Determine the target amount of ideal emergency funds
The ideal emergency fund target will depend on the number of dependents you have. However, set sufficient and realistic targets so that you can achieve them. The following is the ideal emergency fund size based on the number of dependents and monthly expenses:
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Single
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Married
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Married and has one child
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Married and has two children
This means that if you are not married, the minimum amount of emergency funds you need to set aside is at least 3 times your monthly expenses.
This means that if you are married, you will have additional dependents, namely your wife or husband. Therefore, you need to have an emergency fund of at least 6 times your monthly expenses.
By having children, the ideal amount of emergency funds you need also increases. You need to collect an emergency fund of at least 9 times your regular monthly expenses.
Unlike before, if you have two children, then the ideal emergency fund that is suitable is at least 12 times your regular monthly expenses.
Set a target time to collect emergency funds
A time target needs to be set so that you are more motivated to collect emergency funds. For example, you target that within 1 year, the emergency funds must be collected. Don't forget to prioritize saving emergency funds so they can be filled quickly.
Create an emergency fund account separate from your daily transaction account
One way to prevent emergency funds from being used just anywhere is to create a special account for emergency funds. The emergency fund account must be separate from the account you use for shopping. This aims to prevent you from being wasteful and having a headache in calculating it. Not only that, you can also save emergency funds in various financial products.
How to Save an Ideal Emergency Fund
There are several places you can use to save emergency funds. These places include:
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Bank
One of the most common places to store emergency funds is the bank. This is because savings will be liquid, which means you can easily convert them into cash at any time. You can also open a new account specifically to store emergency funds.
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Money market mutual funds
Another alternative for saving emergency funds is money market mutual funds. Don't worry, this type of mutual fund is different from stock or income mutual funds, so it doesn't fluctuate.
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Gold bars
Finally, gold is a safe place to store emergency funds. The reason is, gold bullion is an instrument that is classified as liquid and easy to sell. Maybe gold bullion sometimes fluctuates following market prices. However, generally the price of gold always soars in the long term.
Benefits of Having an Emergency Fund
An emergency fund is not just in case an emergency situation occurs. Emergency funds can be useful for the following things:
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As funds to repair assets
Everyone certainly has assets such as a house, car or motorbike as a residence and means of transportation that supports life. However, these assets do not last forever. One day, they may experience damage or become obsolete. When this happens, you can use emergency funds to overcome this.
For example, if the tile roof of your house is leaking, then you need to prepare quite a lot of money to repair it. You can use part of your emergency fund in this case. With an emergency fund, the money you need to prepare will feel lighter and less.
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Avoid debt
Apart from urgent needs, you can also avoid debt with emergency funds. Debt is generally used by some people who have not prepared emergency funds. However, debt can be detrimental due to the high interest it incurs. Therefore, it would be better if you immediately prepare emergency funds rather than having to have debt.
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Lighten the burden of accidents and illnesses
Apart from insurance, emergency funds can also be used as capital for accident and illness costs when needed. This is because the cost of hospital care is not only the cost of medicines and hospital costs. However, you also need food costs, transportation costs, and even income reserve costs if you don't go to work. This can be overcome if you have an ideal emergency fund.
Create an Ideal Emergency Fund by Opening a Savings Account at Bank BTN
After knowing the ideal emergency fund, you will definitely want to start saving immediately. You can save with Bank BTN. Have a specific goal to achieve? Don't worry, BTN can be your best solution. BTN provides various savings products that you can adjust to your needs, one of which is BTN Siap.
For those of you who already have the BTN Savings parent product as a source of monthly funds, you can open BTN Ready Savings. You can choose the savings period from 1 to 15 years according to your wishes. Apart from that, with only a minimum of IDR 100 thousand and multiples for regular monthly deposits, you can open a BTN Ready Savings Account.
Our product is of course equipped with various advantages that are ready to welcome you, including premium-free life insurance protection, free additional insurance protection in the form of grief compensation due to accidents and protection from tropical diseases, an auto-debit system from the main account that will make it easier for you, and even without In your savings book, you will also get transaction details via e-statement which will be sent to your email every month.
What are you waiting for? Make all your plans and dreams come true with BTN Siap Savings, and visit our website to get more information.
Tags: Emergency Fund, How to Save an Emergency Fund, Benefits of Having an Emergency Fund, Benefits of an Emergency Fund
