1 “I Don’t Have Money For Emergencies”
You know you ought to have an emergency fund, but just can’t seem to squirrel away the money for it every month. Should an unexpected crisis occur, you’d be completely unprepared. But don’t panic.
Anna Haotanto, CEO of online financial guide The New Savvy, says the first thing to do is assess what your needs in an emergency would be and how much money you’d need for it. “Distinguish between your needs – that is, your living expenses – and your wants,” says Anna.
Next, use a goal-based investment approach. Bhaskar Prabhakara, co-founder and CEO of WeInvest, an online wealth management platform, says, “Divide your savings goals into investment pots for each of your potential emergency expenses.”
You’ll want to save enough to cover at least six months of living expenses. This gives you a buffer to pick yourself up, especially if you’ve lost your source of income.
“Don’t make excuses for not saving, like telling yourself that you just aren’t disciplined. Make your emergency fund a priority, no matter what,” says Anna. “The anxiety and stress that come with an unforeseen crisis can be minimised by this small effort.”
If something unforeseen does happen, and you don’t have enough stowed away, the first thing you should do is approach family and friends for financial assistance.
Your pride may take a beating, but this option could keep you from falling further into debt. However, from your loved ones’ perspective, lending you money may be a big risk, so make sure you go in with a clear timeline with an action plan on how you will repay them – and stick to it. If that option fails, Anna says you might have to take a personal loan or a cashline.
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