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How important is emergency money? How much do you have to store to be enough?

Another expense that many people should be prepared for, that is. emergency fund This is an unexpected expense that you will have to pay. Simply put, when you encounter bad luck and you have a reason to lose money. This is where the emergency funds saved will be able to help you.

But when it is necessary to bring a sum of money to pay Many people often encounter problems they have never planned to keep a reserve before. causing no money to pay in an emergency In this article, let’s look at how important emergency funds are. and how much must be kept to be used

When should emergency funds be used?

For emergency money, it must be money that can be taken out for immediate use. when the unexpected happened before Usually, if it’s a small amount of money, many people can still bring their own money to spend first, such as broken appliances, having to buy new ones to replace.

but if you have to pay in a single lump sum It may be difficult to find and pay immediately. The expenses that must be paid at one time include:

have an accident

One of the unforeseen expenses is Medical expenses in the event of an accident with a relatively high cost and if the condition is severe, there will be a hospitalization fee plus If you do not want to bring a sum of money to pay for treatment, there is still a way to be able to bring the money to pay. Accident insurance and the insurance company will pay the expenses.

For people who have a car and drive into an accident In addition to the pain that requires treatment, there is also the cost of car repairs that must be paid. If anyone does not want to be burdened with the cost of accidents that will last forever, I recommend that Voluntary insurance for your car will be the best

Detects serious illnesses that require immediate treatment

Another event that will not be in anyone’s life plan is the Detection of serious diseases that require urgent treatment which will have long-term maintenance fees that must be paid But if anyone thinks that they can’t save money in such a large amount Getting life insurance that covers critical illness will save you from the burden of medical expenses.

Sudden loss of income

An emergency fund can help you continue to spend in a state of unemployment, for example, if you were in a fixed income occupation. One day you suddenly get hired out of your job. or have a career that is a private business Then one day, the market you’re working on comes to a halt. Can’t continue doing business

The clearest example we see now is unemployment. plus the economy that is in turmoil from Covid-19 causing many people in the current financial condition that lacks liquidity lack income until it is not enough to spend Here, it can be seen that emergency funds can be used to support and circulate temporarily in this situation.

Where to keep emergency money

Before separating the emergency savings, it must be separated that this money is not investment money. Because when you have to take out this money, it must be in a state that is ready to be used. which if using this money to invest like stocks Or a high-risk fund may cause this sum to not be fully recovered during the time it is needed.

But the question is, where should I keep this money to be safe? and is not taken out to spend when There don’t need to be two storage recommendations:

Open a high-interest deposit account

Many banks offer services that allow you to open a high-interest deposit account. The more money you save in that account, the more interest you earn on your deposit. Each bank has its deposit conditions. To encourage you to have discipline in saving money into the account regularly.

To buy mutual funds

Look for a fund that offers purchase interest and low risk. Then purchase at the same price every month. It’s another way to increase your emergency savings from rising fund prices. but will not be able to withdraw immediately You will have to wait 2-3 days after requesting a withdrawal.

How much emergency money do I have to collect?

The emergency bill for each person should be 3-6 times their monthly expenses. Or give it enough for another 3-6 months. For example, if your income is 15,000 baht per month and your expenses are 12,000 baht per month, you should have emergency savings of 36,000-72,000 baht to be used to pay when you are suddenly unemployed

What should I do before starting to collect emergency funds?

Try to start by deducting income and keep it for 500 baht per month or for those who still can’t figure out which part of the expenses to bring to save as emergency money. may start from looking at regular expenses, including

  • credit card installment
  • installment loan loan
  • Monthly expenses such as internet bills, water bills, electricity bills

These are expenses that you can control. by contacting the bank or creditor to extend the repayment period You’ll pay lower annuities, allowing you to keep deductions in your emergency fund.

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