It’s important to build an Emergency fund because in the event of a family emergency due to illness, job loss, or any other tragedy. For example Covid-19 or the 2nd or 3rd wave you want to survive financially for 3 months.
Your emergency fund should be equal to 3x your monthly survival number. Therefore the first step is to identify how much money your family needs in a month to pay for your basic expenses for food, housing, schooling, car, gas, utilities, insurance and all other necessities. Second, multiply this monthly amount by 3 because you want to make sure you can survive for 3 months if you or your spouse cannot work. Third step, keep this in a savings account. Don’t put this in stocks or high risk mutual funds because you want this to be safe and to be liquid.
Having an emergency fund is your duty and your responsibility so make sure you take the steps to build one today.
I am Bernadette Laxamana, President of Karista Mortgage, we help you get a great mortgage and use it to build wealth because we want to make a positive lasting difference!