I have always known about emergency funds, but nothing cemented it for me like the advice that my friend gave me when I got a new job. She said to me, “now that your earnings have increased, be sure to save some money monthly,” although she didn’t call it an emergency fund.
She called it savings, but over the years I have come to see this savings as an emergency fund.
I remember back in elementary economics where I was taught the various motives for holding money. Among the listed motives, which were transactionary, precautionary and speculative, the one that captured my attention more was holding money for precautionary motives.
Usually when some people hear about savings, they might want to argue, while others might want to make jokes, like it's people who have enough to eat that save money, but then savings doesn’t have to be in millions; it can be as little as a dollar daily or a thousand naira daily, as is the case in Nigeria.
Basically everybody who earns should have some funds saved up for emergencies. These emergencies could come in the form of health challenges, a faulty gadget that one utilises for their day-to-day transactions, etc.
I remember one morning my daughter woke up complaining of a stomach ache. I thought it was something minor, so we went ahead to prepare for the day. While she prepared for school, I prepared for work. Then, all of a sudden, as she was having breakfast, she started vomiting. Before I knew it, a complaint about a stomach ache graduated to diarrhoea.
Her temperature changed for the worse, and her body was burning. As I tend to her with first aid, I knew her health condition has gone beyond self-medication. Thankfully I was able to stabilise her temporarily as I rushed her to the hospital.
You see, this unexpected experience would have turned me into a beggar if I didn’t have some money saved up. I spent money not budgeted for, and this was were savings became the saviour of the day lol.
Recently a friend of mine, as well as her other neighbours, was evicted from the compound that they lived in. The situation was that their rent was due and the house had been sold. The new owner didn’t want to continue having them as tenants, as the intent for purchase was demolition.
As devastated as my friend was that the landlord did not inform them of the sale, so they could prepare, she was still able to pull herself together by withdrawing from her savings to add to what she has ready for rent.
That was how my friend was able to afford the unplanned expenses that come with renting a new house.
You know one thing i have come to realize with savings is that we do not really save to become rich or wealthy; no that’s where investments comes in. Basically we save for emergencies. Quite unfortunately that not many adults know this as some of them have the mentality of saving to be rich. Hence when emergencies comes, they are stretched thin as they wouldn’t want to temper with their funds saved.
Above is my entry to the India united weekly prompt. You can participate HERE