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The Importance of Setting Up a Family Emergency Fund

Does the family emergency fund need to be prepared in a fixed budget? If so, when should you start preparing family funds?

The Importance of Family Emergency Fund
Every family must have different needs. The size of the number of family members determines the amount of funds that must be spent each month. Not to mention if there are unexpected events that cost a lot of money.

Therefore it is very important for you to prepare a fund on this one.

How to Set Up a Family Emergency Fund for Critical Circumstances
This one fund is a fund that is specially prepared for sudden or unexpected needs in your family.
For example, funds for medical treatment, accidents, vehicles, or others. How do I set it up? Here's the explanation.

Separate from Other Funds
The Importance of Setting Up a Family Emergency Fund
You must understand that this fund is not an investment. And not even children's education funds. Even though this fund is indeed prepared for your family, you must be able to separate it from other funds.

Easy to Cash Out
Family emergency funds should be easy to disburse. That is, these funds can be obtained immediately when the situation is urgent. You should also make sure to get these funds in cash in a short time.
Therefore, you should be able to choose a flexible emergency fund deposit instrument. Savings in banks or precious metals can be an option because they can be withdrawn in cash whenever you need it.

The amount
The number of different family members greatly affects the amount of funds that must be prepared by you. Especially if you are married, the number of your children will determine how much you should ideally have an emergency fund. However, this fund is usually 3 times the income.

Emergency Fund for Singles
For those of you who are single, the emergency fund you have is at least 6 times your monthly income. You can set aside 10% of your monthly salary. If you do this regularly, you can collect this ideal amount in 2-3 years.

Family 1 Child Fund
If you are married and already have 1 child, then the ideal amount you should prepare is 9 times your monthly income. This fund can at least support your life for the next 3 to 6 months.

Family of 2 Children or More
If you have 2 children, then 12 times your monthly income must be ready to become an emergency fund. If you have 3 children, the ideal is 15 times your monthly income. The amount is calculated from each 1 family member given a plan of 3 times the monthly income. In other words, the way to calculate the emergency fund is the number of family members times three.

The amount to be prepared is ideally set aside 10% of your monthly salary. However, to get it, it doesn't have to come from your monthly income alone. You can separate it from other sources. Take from daily commissions, annual bonuses, holiday allowances, and some other additional income.

Prepare to Anticipate Urgent Needs
In life, what is to come is unknown. therefore prepare early. It doesn't matter how many you separate, the most important thing is that you have to be able to run it regularly.