In a world of uncertainties, living with the security of an emergency fund is priceless.
According to Forbes ‘If you have savings to turn to during this crisis, you’re in a fortunate position. Yet that doesn’t mean you should dive right into those funds without a plan. Yes, the COVID-19 crisis may be exactly the type of occasion when it’s okay to draw money out of your savings account. Still, with the amount of uncertainty in the economy at this time, it’s important to tap your emergency fund as wisely as possible.’
- Make a crisis budget – It is no longer business as usual. Thus, you should not plan to continue spending money the exact same way you were doing before the COVID-19 crisis began. Rather, you should put pen to paper and make a list of only the essential things you need to keep paying for. It is in your best interest to cancel automatic subscriptions as well, and subscribe for those services on a need to use basis. This way, you are on top of your spending habits, and can prioritise the use of your funds effectively.
- Lower your expenses – Based on your earnings, you have probably adapted to a certain lifestyle. You deserve to enjoy your income, and give yourself the pleasures commensurate to your hard work and social class. However, these are strange times, thus it is wise to put a lid on the spending pot, and open only when essential. This way, even if you are not earning as much as usual, or you lose your income, your emergency funds won’t be hurriedly exhausted.
- Create New Streams of income – This is not the time to act like you have a trust fund, even if you do have one. Your emergency fund is also not a bottomless pit. It can finish. Therefore, it is wise to create other sources of income even if you already have one. The uncertainties in the world economy mean that you should prepare for the worst. You can’t lose even if the worst doesn’t happen. Your best case scenario would be to get out of the crisis richer than when it began. Will that not be wonderful?
Whatever you decide, remember that the emergency fund is to save you from rainy days. The rainy days may be here, but you have to be ready for even heavier rain in the future, so you must remain prudent.
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