The Real Score with Emergency Funds

In times when there is scarcity of masks, you will think of the days when you did not even think of buying a mask. Because how would you know if you will ever need one? In the midst of COVID -19, I am thinking about our fellow Filipinos who know it is important to save up for emergencies but haven’t gotten around to doing it. Some, perhaps as part of a mechanism to cope with the stress, resort to joking by saying that all they can do is panic because they cannot afford to any buying for lack of funds. A rule of thumb for emergencies is to have at least 3 to 6 months’ worth of equivalent expenses kept in a bank savings account. But now, some experts are saying that the ill effects of CoVid-19 may take as long as a vaccine is developed, which is a least one year away.

For extreme emergencies like the current pandemic, it may even be advisable to have the equivalent of 1 year’s expenses saved in liquid instruments like time depositsand treasury bills. This will give enough time for the world to find a drug to cure CoVid-19 and a vaccine to shield us from the SARS coronavirus 2, is looking out for a cure on the disease, and maybe in a few months employers recoup their losses, for a laid off employee to find a new job and for a small business owner to recoup his losses. As of this writing, a number of friends locally and abroad have expressed fear that contingency plans are now being put in place in their companies such as reallocation of manpower, relocation of office assignment to distant locations. Another area of financial planning that we should protect is our credit score. Buying online and just having the purchases delivered will minimize being in close proximity with other people. And do follow certain advice on what to do with delivered items likes groceries when receiving them and bringing them into your home.

Image from: www.thermalscanners.au.com

Then use your emergency funds to fully pay your credit card purchases when they fall due. Finally, it is always best to check if the br

eadwinner/s are adequately employing one of the better risk management tools in personal finance, that of life insurance. Do not just look at the coverage for untimely death but also the health benefits like ICU and hospitalization, critical illness coverage, disability and death coverage that might be useful medical emergencies. This pandemic is a wakeup call to really understand the real score should we face emergencies. And w

hile no one can ever fully prepare for something that is really unknown, like this novel coronavirus, we can at least start by the rules of thumb and adjust as we go along. So, what is your real score?

This article is from the YAMAN Coach e-newsletter Issue No. 6 by the Personal Finance Advisers. Article written by Author Coach Jendee S. De Guzman