When Crises Hit: All about Emergency Funds  


When we spend money, we spend it like there is no tomorrow. That is not the wisest thing to do when we talk about personal finance. Perhaps we heard some Singaporeans who have secret stash of money so when life gets tough, they will thrive.


God forbid it but we will encounter crises in our lives. It is up to us to yield or keep on fighting. How can we battle it if we do not have any emergency funds? It is crucial that we need to rely on ourselves when times get rough. We cannot just beg, borrow or steal money when the tide is very high.

Here are some things that we need to know about emergency funds:

  • What is the essence of emergency fund: An emergency fund refers to the money we set aside for emergency situations like an illness, loss of job and unexpected big expenses. This is meant to be our safety net and not to be used as a down payment for that dream house or car.


  • How much should it be? There are experts who recommend three to six months of our average living expenses to be set aside for emergency situations. As a start, we can consider setting aside at least three months of our living expenses as our emergency fund.
  • How to start? There are many things that we can consider. But before anything else, we have to be serious about this. This is not something that should be ignored. We can use budget application or we can simply plan our money.
  • Which bank should we store our emergency funds? We have to keep our money as liquid as possible so it is easy to extract when things get rough. Ideally, any bank will suffice but if we want to get the best out of our money, we have to consider banks with high interest rates say UOB One Account for example. They give up to 3.33% of interest.