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Emergency Fund | Pondo sa Kagipitan



If this has been asked before, I'm sorry for the duplicate.

I've managed to accumulate P100,000 this year, but this is my only savings account so you can say this is my emergency fund. My question would be, where should I put it? Since this is my emergency fund, I think it's a bad idea to put it in investments. Do you guys think I should put it in time deposit? T-bills? Or just let it stay in a savings account?

I really appreciate your input, thank you!
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Comments

  • sooperbuttssooperbutts orchard by night... PExer
    edited March 2019
    hi to all fellow PEx'ers!:)

    karaniwan daw sa ating mga Pinoy ang hindi marunong humawak ng pera. karamihan sa atin, nag-start maginvest pag retirement na. kakaunti lang ang naglalakas loob habang bata pa.

    along the course ng pagsugal sa kahit anong investment, laging may risks involved. ang tanong handa ka ba sa negative outcome? kasama sa pagiging handa eh kung may emergency fund/s ka ba?

    sabe ng mga experto sa financial literacy, dapat it should be 6x ng sweldo or income mu to sustain you sa ganung scenario. alin ka sa 3 category below:

    1. kumpleto na ang emergency fund/s mu *okay*
    2. nagsisimula ka pa lang magipon
    3. wala talagang emergency money :bop:

    kindly share your insights please, thanks!!!
  • jerseyvixenjerseyvixen Reinventing Eve PExer
    number 1 - lemme just say that I don't believe that an emergency fund SHOULD ever be "complete" - we can always add more

    where to start: I've been taught to save since grammar school and have done well - I think - when I turned eighteen my parents were so impressed that they doubled my savings for my birthday present - after I graduated from college in june my mother wrote me a check as "seed money" to start my life out here "in the real world" [her words lol]

    I just recently moved all but a thousand dollars from my savings account - along with cds that matured and opened a money market account that earns more interest than a savings account but lower by a smidgen than what the bank was offering for cds [24 mos @ 1.75%] - I want flexibility just in case rates go up during this period

    the company I work for offered me 401k from day one and I chose to put in 10% of my salary which my employer matches 100% of the first 7%

    I have a separate brokerage account that I monitor but don't do a lot with that I opened while interning for an investment bank

    when I turn 25 I'll be the beneficary of a trust - that's when I start being irresponsible and quit my job on a whim and travel the world lol j/k
  • ground_breakground_break Pexer PEx Influencer ⭐⭐⭐
    Wala pa akong emergency money! If I lose my job, I won't survive a month with the same lifestyle...
  • jay372011jay372011 Member PExer
    According to Suze Orman,dapat 8 months daw of your salary. 6 or 8 months it does not really matter. Dapat liquid ka for any eventuality.

    Ako meron pero wala pang 6 months, but I am getting there. Siguro yung credit cards ko , I am trying my best na mabayaran lahat para if ever there will be a need I can cash out on my available limits.

    Most of the people dont pay their outstanding balance para liquid sila whatever happens, but according to financial analyst, they should pay as much as they can and then when there is emergency that is the time to use your limits.
  • Paul_BluDiaPaul_BluDia Member PExer
    another advantage of having an emergency fund is, when you have it already, you can now redirect your money on building assets that generate more money.

    paying your debt and saving for an emergency fund are just the first steps.

    the next step is into investing (e.g. business, paper assets, etc.)

    My Personal Notes
  • dohdohdohdoh Member PExer
    number 2 ako! :)
    pero sa tingin ko makakasurvive naman ako ng up to 6 months ng walang work with my current savings.. i'm planning to have an emergency fund na kaya ko magsurvive in a year without sacrificing my current lifestyle..
  • CLYCLY bummer PExer
    just to be clear, emergency funds and investments are 2 different things.

    You can save money and put them into an investment (bonds, stocks, mutual funds, or even a simple long term time deposit, etc) depending on your risk appetite.

    Emergency funds are savings which are very liquid like in an ATM account and check book. Otherwise, it cannot be classified as an emergency fund since you cannot use it when you need it.

    Tip: Adjust your emergency fund whenever there is a change in your lifestyle - more expenses per month due to additional cost from inflation rate, rent, car payment, mortgage, tuition fee increase, etc. I think at least 6-8months of your monthly expense is good enough.
  • jerseyvixenjerseyvixen Reinventing Eve PExer
    jay372011 wrote: »
    Most of the people dont pay their outstanding balance para liquid sila whatever happens, but according to financial analyst, they should pay as much as they can and then when there is emergency that is the time to use your limits.

    I agree - as much as possible - pay off your credit card bills monthly and stay away from revolving balance - unless it's a home a business or a car loan - stay away from paying interests
  • SuperOnyxSuperOnyx Member PEx Influencer ⭐⭐⭐
    I have a 5-month emergency fund. Natetempt ako gastusin. :D
  • jay372011jay372011 Member PExer
    Another clarification, when we say emergency funds it must cover all our bills and live a bit comfortably, so it means it must be near our paychecks that we receive a month.
  • sentrysentry Zerg Lurker PExer
    From what I understand, emergency funds is based on monthly expense, not salary. Sabi daw around 3-6 months worth of expenses.
    So if your salary is way above your expenses, then 6 months worth of salary might be overkill. And if salary nga, does it mean gross or net? with high tax, malaki ang difference.

    The logic is based on the possibility of losing your source of income. It means you can still live with the same standard for 3-6 months giving you enough time to find a new job.

    Nonetheless, kahit ano pa ang exact definition nito, it is still good to have a highly liquid emergency buffer fund. Any excess can be used for investments...
  • jerseyvixenjerseyvixen Reinventing Eve PExer
    and look into money market accounts because it yields higher while staying liquid - unless it's different in the pi
  • trailblazer_boytrailblazer_boy Member PEx Veteran ⭐⭐
    kinda meron hehe... yung sueldo ko diretso lang sa bank so very liquid... wala pang time maginvest eh...
  • glenchuyglenchuy metrosexual shopaholic PExer
    i have around 2 months salary worth of "liquid" funds which i call my "slush fund", i also have 2 months worth of "liquid" funds which i call my "revolving fund". plus around 8 months salary worth in foreign funds (USD/EUR) and around 4 months worth in ordinary TD account. i don't count stocks as "savings" and i book them as my expenses (and not investments). that way if i lose them all due to stupidity, they won't hurt me as much.
  • SuperOnyxSuperOnyx Member PEx Influencer ⭐⭐⭐
    I watched an episode of Oprah last year with Suze Orman telling the audience to pay only the minimum on their credit card balances, while they save up for an 8-month emergency fund, a 180 degree turn on the usual credit card debt advice.

    A Change in Credit Card Strategy

    Even though her advice was specifically targeted to Americans during the recession, at one point I was tempted to try this strategy. :D
  • glenchuyglenchuy metrosexual shopaholic PExer
    ^^ credit card companies in the US don't charge 3.5% interest a month. ours do. doing it here would be financial suicide.
  • trailblazer_boytrailblazer_boy Member PEx Veteran ⭐⭐
    yea... ako I always pay all outstanding balance kasi ayaw ko may utang tska may pambayad naman ako hehe bkit pa ako maghihintay
  • sooperbuttssooperbutts orchard by night... PExer
    Wala pa akong emergency money! If I lose my job, I won't survive a month with the same lifestyle...

    pareho tayo dito :mecry:
    jay372011 wrote: »
    According to Suze Orman,dapat 8 months daw of your salary. 6 or 8 months it does not really matter. Dapat liquid ka for any eventuality.

    Ako meron pero wala pang 6 months, but I am getting there. Siguro yung credit cards ko , I am trying my best na mabayaran lahat para if ever there will be a need I can cash out on my available limits.

    Most of the people dont pay their outstanding balance para liquid sila whatever happens, but according to financial analyst, they should pay as much as they can and then when there is emergency that is the time to use your limits.

    akala ku oks na 6months, may 8 pa pala :(
    ang haba pa ng hahabulin at tatrabahuhin ku :mecry:
    CLY wrote: »
    just to be clear, emergency funds and investments are 2 different things.

    You can save money and put them into an investment (bonds, stocks, mutual funds, or even a simple long term time deposit, etc) depending on your risk appetite.

    Emergency funds are savings which are very liquid like in an ATM account and check book. Otherwise, it cannot be classified as an emergency fund since you cannot use it when you need it.

    Tip: Adjust your emergency fund whenever there is a change in your lifestyle - more expenses per month due to additional cost from inflation rate, rent, car payment, mortgage, tuition fee increase, etc. I think at least 6-8months of your monthly expense is good enough.

    yes po sir/mam. clear po na emergency funds are NOT investments, liquid money po na pwede gastusin pag nawalan ka ng work or source of income ;)
    glenchuy wrote: »
    i have around 2 months salary worth of "liquid" funds which i call my "slush fund", i also have 2 months worth of "liquid" funds which i call my "revolving fund". plus around 8 months salary worth in foreign funds (USD/EUR) and around 4 months worth in ordinary TD account. i don't count stocks as "savings" and i book them as my expenses (and not investments). that way if i lose them all due to stupidity, they won't hurt me as much.

    galing mu sir *okay**okay**okay*
    sana aku din.. in due time..by God's grace and mercy :)
  • diannedcdiannedc Banned by Admin PExer
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  • freelancer_babefreelancer_babe Member PEx Influencer ⭐⭐⭐
    I just choose between these three:
    1) savings account, try to get one with the highest interest
    2) time-deposit ladder
    3) SDAs

    My EF is divided: 50% in an ATM savings account and 50% in an SDA. Noong di ko pa kaya ang minimum ng SDA, I just use time-deposit/CD ladders.

    Passbook account would do for some people, but I prefer the ATM. I leave the card at home.

    I don't like the idea of keeping the EF in money market UITF or mutual funds - you could still lose part of the principal, kahit hindi masyadong risky ang mga ito.

    Also, when choosing a bank, avoid those rural banks and thrift banks that are not subsidiaries of those bigger universal banks. Sure, they give higher interest rates pero madali silang magsara. It's not easy to claim money from PDIC.

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