The-Truth-on-6-month-of-Your-Emergency-Fund-During-Covid-19-sg
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The Truth on 6 month of Your Emergency Fund During Covid-19

Very often financial consultant generally encourage you to set aside 6 months’ worth of your living expenses as a personal and/or family emergency fund, in case unforeseen situation happened in your life. But is 6 months of emergency fund really enough during Covid-19 pandemic?

 

What is Emergency Fund?

An emergency fund is a sum of money you set aside for “rainy days”, most often the amount is equal to 6 months of your expenses. As when unpredictable events happened, it can be life-altering, and most often it will be expensive, resulting in financial losses. An emergency fund allows you to pay out-of-pocket expenses on minor events that are not planned for, so you do not have to take on loans to cover your short-term lack of cash.Example of unpredictable minor events can be, minor accident, minor sickness, temporary loss of job, urgent repairs or purchases. And external event like covid-19 pandemic which may indirectly affect your income, health and daily routines which may cost you extra to resolve within the pandemic period.

 

The Truth about Emergency Fund

The truth about emergency fund is that you will have to balance it with adequate medical insurance, life insurance and income protection insurance for it to works flawlessly. This is because simply base on your emergency fund alone it may not be adequate for major unpredicted events. For example, due to this Covid-19 pandemic, your income is reduce by 30%-50% and you are down with major accident or illnesses. Majority of your finance will goes to medical and post medical expenses (recovery and living expenses), and you may not be able to earn an income for a long period of time. It will be quite a struggle if solely depend on your emergency fund without insurance. Your medical insurance will help you with your medical expenses and income protection insurance will help you with your living expenses. Unless you are a high income earner whom live a simple lifestyle and 6 months of emergency fund is equated to a middle income earner’s annual income or even two years of that income. In cases like this, it is certainly an advantage to have excess emergency fund in your account. In another perspective, it is also wise to deploy that excess capital onto your wealth accumulation, like starting a business, investment or retirement planning, rather than allowing the cash idling in your account just for “rainy days”. But this can only be done when you have adequate insurance as your wealth protection tools. In an optimistic perspective, you are healthy and kicking, thus your earning potential will be largely higher than your insurance premium and emergency fund combine, thus stay healthy and stay safe.

In life everything is about finding that right balance, it is healthy to have a balanced diet and work life balance. The right balance also apply to your financial planning. Leverage on insurance and integrate it into your emergency fund planning for it to be perfectly balanced.

 

covid19-singapore-Safe-Distancing-at-Eating-Places

Be Socially Responsible

As individuals and companies, we all have a duty to act in the best interests of our environment and society as a whole. When buying food supplies and essentials, buy only what you need. When you are sick, wear a mask, stay at home, see a doctor and do not doctor-hop. Keep at least 1 meter apart when eating places, shopping mall, while queuing and at work place. Stay safe and avoid crowded places.

 

One Last Thing

An emergency fund is a sum of money you set aside for “rainy days”Balance it with adequate medical insurance, life insurance and income protection insurance for it to works flawlessly. Leverage on insurance to optimize your emergency fund planning for it to be perfectly balanced. Stay united and fight this pandemic together. Please follow the travel advisories and be socially responsible. Also not forgetting to give credits to all our frontline medical teams and government task force in fighting the coronavirus. Please visit my other post on Covid 19 Singapore Updates on Medical Insurance Claims.

And lastly this might be the best time to look into your personal and family Insurance and Financial Planning. In order to reduce further spreading of COVID-19 in Singapore, Work From Home (WFH) measures had been implemented to heightened safe-distancing and to reduce movement. Insurance is an essential service during Covid-19 Circuit-Breaker period. I am here for you if you require insurance and financial planning services. It may be policy review and updates or a second opinion on your insurance and financial planning needs, feel free to arrange a meeting with me. It will be conducted virtually through Zoom video conferencing at the comfort and safety of your home. So I look forward in seeing you on video, through my virtual insurance and financial planning services. Also not forgetting to give credits to all our frontline medical teams and government task force in fighting the Covid-19. Stay united and fight this pandemic together. Please follow the travel advisories and be socially responsible. Stay safe and stay healthy.

 

Types of Insurance and Financial Planning

Here are 4 main types of insurance and wealth accumulation planning

 

Note: Opinions expressed are solely in Mr. Chan Kong Meng’s personal capacity and neither express the views or opinions of Prudential nor represent any professional advice in Mr. Chan Kong Meng’s capacity as a PACS representative.

 

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