No one prays to hear bad news, but should it happen one must always be prepared. Being prepared includes having readily available funds. This is where emergency funds come to play.
An emergency fund is money you save to take care of unexpected occurrences. It is important to note that it is a fund you have to consciously save towards.
Emergency funds can be used for
- Unplanned home repairs
- Sustenance during job loss
- Medical emergencies
- Usually any unplanned or unexpected occurrence.
Do not use your emergency fund for expenses like house rent, travel expenses or buying a car. These expenses should be planned for aside. Also, your emergency fund should not be kept in any risky investments. It should be a money source that is readily available to you at any time without hassles.
How Much Is An Ideal Emergency Fund?
First, there is no one size fits all. You should save what you’re comfortable with towards building a buffer that is sufficient to sustain you. Experts advise that your emergency funds should be as much as 3 times your living expenses if single, and between 6–9 times if you have dependents. If you’re wondering what living expenses are, they are expenses that cover food, t-fare, accommodation, etc. We will talk more on this in a future post.
Quick tips about saving towards your own emergency savings
1. You don’t have to start big; you can start small and save consistently towards your goal.
2. There is no one size fits all, save according to your lifestyle.
3. Save your money where you can have easy access to it without stress. One of such is Octa.
Octa allows you save consistently towards your goal, (an emergency fund in this case). You earn higher interests of between 11–13% p.a on your savings and you can withdraw from it any time at zero charges; no bank, ATM, SMS or maintenance charges.
Remember how we talked about saving comfortable sums towards your goals? Loads of Octa users save as small as N1000 daily towards theirs. Now imagine you doing the same … or even more? Sounds like the right thing to do isn’t? Why not start a savings goal right away with Octa.