Career & Finance

How and Why You Should Build Your Emergency Fund NOW!

What? What is an emergency fund? Why should I build an emergency fund? What are the reasons for doing so?

I’ll tell you why you should build one:  life is full of surprises! 

Expect the unexpected. Prepare for the worst.

There are so many things that can happen in a period of time. An emergency fund helps you sleep better at night because you know that even if an emergency occurs, you are capable of dealing with it for a period of say, 3 months, until you can get back on your feet again.

Some emergencies are:

1. Loss of a loved one.
2. Being fired from your job.
3. Sudden health emergencies. 

A real emergency is a threat to your survival. Buying new clothes or eating at fancier restaurants are not emergencies. People with emergency funds handle all these events (and other emergencies) when they have their emergency fund. They don’t feel that much powerless anymore. They have funds which they can use until they’re stable again. Then they save money for their emergency fund again. And then when another emergency happens, they repeat the process.


How much should I save?

No expert can say to you that there is a specific amount. It all depends on you. You should have at least 3-6 months’ worth of your expenses in your emergency fund. Let’s say you spend P20,000.00 a month. Then you should have P120,000.00 in your emergency fund for you to be able to make do while you are still unstable. Save what seems right for you.


How do I do this?

1. Stop debt. If you have credit card bills, pay them. Be wary of the out-of-this-world interest rates. Don’t drown in debt that would take money out of your pocket.

2. Start small. It’s okay to start small. Personally I deposit P 1,000.00 every month for it. As long as I do this monthly, I know that I’m on my way to building my own emergency fund. We should treat it as a bill. In the long run, it will help us.

3. Save money by living basically for a period of time. Do you really need that latte every single day? Why not make it thrice a week and save the remaining to your emergency fund? You’ll get used to it, gradually. And then maybe skip it altogether. Consuming such won’t do good to your health, anyway. If you’re not really a fan of health and nutrition, humor yourself – it’ll be for a limited time only anyway.

4. Have a buy nothing weekend. We have one in our family and it gets to save us money. Imagine, we used to go out every Saturday and Sunday and we’d spend around P5,000.00! What if we stayed in, watched a few movies and made our own popcorn? Less hassle, more bonding, and more saving. And more money to be used in our emergency fund.

Live wisely,
Lianne Martha Laroya

About the Contributor

Lianne Martha Maiquez Laroya writes to enlighten you and empower you to take charge of your finances. As a financial advisor, Lianne is also the founder of The Wise Living and Young Pinoy Millionaire, both websites dedicated to educate you on money management and early investing without boring you to tears. Get your FREE copy of her book, “OMG! Where Did Your Sweldo Go?” here. Questions? Connect with her on Twitter, email her at or message her at 0916-737-8741.

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