07 Feb 2023 | Edukatips

Reasons to Set Up Emergency Fund from Now

Given the rapidly changing economic conditions, every individual needs to prepare themselves to deal with them. Having an emergency is one way to maintain financial health even in difficult conditions.

Many opinions suggest having an emergency fund of at least 6-12 times the number of monthly expenses. However, having an emergency fund that is more than this amount would be even better. To be able to achieve this, you must build an emergency fund early.

Benefits of Having an Emergency Fund

An emergency fund is very crucial. This can be seen from the many benefits of the emergency fund that’s been collected. The following are the benefits of having an adequate emergency fund:

1. Secure Yourself from Crisis

Wealth is also important for the future. This makes everyone need to prepare an emergency fund early on. At times of crisis, you can immediately use the emergency fund to maintain financial health.

2. Teach Discipline

Setting aside money teaches us to get disciplined. Not only that, not using the money for consumptive needs or wants is also part of the discipline. If you’re disciplined, you can have even bigger emergency savings.

3. Temporary Replacement of Income

All workers face the risk of termination of employment at any time. If it happens, the emergency fund can be used to fulfil daily needs when you don’t have a steady income. Make sure you use it carefully until you get a new steady income.

4. Prepare for Unexpected Events

Disaster, accident, or chronic illness can happen to anyone. Sometimes, unplanned needs arise. Many people end up choosing to go into debt to meet these needs.

This condition can be prevented by having an emergency fund. The money you’ve been saving can help solve this unexpected problem.

5. Keep Your Mind at Ease

There is nothing better in life than having peace of mind. An emergency fund can create a more comfortable and peaceful life for many people by securing many financial aspects.

How to Build an Emergency Fund

Collecting an emergency fund can be done by setting aside regular monthly income. You can determine the amount, but make sure that it is not too small so you can reach the goal sooner.

Use different channels to harbor the fund. Here are some ways to collect emergency funds:

1. Separate Accounts

The first method you can use is to create a separate account specifically for emergency funds. Transfer some of your income to this account regularly every month. Make sure that the funds in this account are not used.

2. Use the Term Savings

Term savings make it easier for customers to collect emergency funds. It’s because the funds will be auto-debited for a certain period of time. In addition, the debit amount can also be adjusted according to your needs.

Opening a Tahapan Berjangka BCA is fairly easy via KlikBCA. Customers can set the time period from 1 to 20 years. To see how to open Tahapan Berjangka BCA via KlikBCA, see here.

3. Deposit

Deposits can also be an option for saving emergency funds. Aside from the interest rate which tends to be higher than regular savings, you can also choose the term for deposits according to your needs from 1, 3, 6, and 12 months. Opening a BCA deposit account can be done online through myBCA, see the steps here.

Those are the benefits and ways to prepare an emergency fund. Let’s start preparing your emergency fund now!