What do you do with an emergency fund?

Emergency fund is the money set aside in the case of eventuality. Emergency fund can be helpful in many ways. Emergency fund is not the usual savings that can be withdrawn at will or at any time. It is set aside for those contingencies that are not planned for; hence discipline is required to maintain it.

Emergency fund eases you of the stress you would have gone through if you don’t have the money kept somewhere. Knowing that you have some money set aside for eventuality boost the confidence in you, calming the stress that may arise from financial crisis. Having emergency fund put you in check to curtail reckless spending because you keep it in mind as a goal you want to achieve. Consequently you are nudged to keep excess money aside.

Now having this fund helps you meet needs such as car repairs which can be pesky and which no one will ever wish for especially in a time of scarce financial resources. Such fund is used to pay for some of your children’s need such as monies that may be requested for in school apart from tuition.

Emergency fund can be used to finance “Once a while opportunity” such as buying a car or a house at a giveaway price which does not happen every other day. Emergency fund will serve as a shock absorber as it will help cushion the effect of sudden job loss.

How do you build your emergency fund? Deliberate savings should be made into a separate account each month, designating it to emergency situations and it should not be diverted but left for emergency when the need arises. Excess fund should be stashed away for this purpose. Instead of squandering what you think is excess you rather keep it. May be you thought the money was in excess because the need for it have not come up at that moment. Money gifts from family and friends can be used to achieve this.

Don’t assume you can squander it because you didn’t work for it after all somebody worked hard to earn it and gave you as a show of love. You should in turn use it judiciously and you will be glad you did.

Hope Ikwe Dosunmu