Hello guys and gals! Before starting anything, I would like to thank you from the bottom of my heart (sounds cheesy, right?) for the continued support that you show thru reading these next entries. Appreciate the support, everyone!

I know you are itching to ask what is the best investment available now, or the hottest stock and mutual fund to pick. Maybe you’ve got that spare cash from your piggy bank, or from your 13^th month pay this year, or maybe a graduation gift you received from nanay and tatay. Well, hold your horses my dear Juan. I strongly recommend you to stop, and re-evaluate some things first. Why? You have to understand first that any investment comes with a certain amount of risk (whatever the magnitude is). And because risk is involved, it would be smart to avoid betting all the chips we have right now, isn’t it? The financially literate Juan will stash a certain amount of money in a secure place wherein he can use it whenever he opts to. And that money is what we call the Emergency Fund.

As obvious as it may sound, the emergency fund is built for emergency purposes (IKR). Of course, the term emergency can be different for each Juan. In a general sense though, one can qualify emergency as one of the following:

1. Unexpected job loss

2. Getting sick which makes you unable to go to work

The next question is how big should this fund be. Is 5,000 Php enough? Hell, no. How about 50,000 Php? Maybe. Or maybe not. Actually, it depends on the person’s situation. So cliché, I know. But it really varies from person to person. A rough estimate by most financial gurus is 3 to 6 months’ worth of your monthly expenses will suffice as emergency fund. In most cases, this would be enough to weather that storm (i.e. finding that next job or recovering from an illness that stopped you from working).

Personally, I’ve got 5 months’ worth of living expenses stashed. This is the accumulated cash that I have saved when I was a kid, as well as some money that I diligently stashed from my salary as a research assistant. I believe this would be enough to cover the operating expenses (including my monthly investments) if I were to get another job today (in case that I get terminated in my job). Moreover, there are multiple places where to hide your emergency fund. Most people that I know keep them in their savings account. Others put cold cash under their pillows and mattresses. You get the idea. Put it in a place where it is liquid. This means that you’ve got access to it anytime you need it. Just to give you a clue, mine’s placed in my Metrobank savings account. I also don’t have the ATM card of this `cause I prefer passbooks. Just plain old go-to-the-teller-to-withdraw works for me, less temptation to splurge.

Do whatever works for you. At the end of the day, how you build your personal emergency fund depends on you. I can’t stress enough though that you should build this fund first before trying to play with invest your money somewhere else. Like your trusty umbrella, your emergency fund will keep you dry and at ease during those wet and rainy days.

Infograph source: www.canada.ca