The way life is so unpredictable makes emergency fund a necessity and not just a luxury. One minute things might go well and the next minute things might go south. So having emergency fund especially in my country were people sees insurance as a waste of funds is necessary.
Emergency fund is any money set aside to take care of unpredicted situation. It's a life saver, you can call it shock absorber funds. Personally, I plan very well for this kind of fund, because it do help. How do I go about it ? Take note, emergency funds is not savings, there arr two different things.
While saving is necessary and helps to realized a project planned for, emergency fund is not done with the intentions of using it to achieve a particular goal. It is solely for emergency and again, it doesn't mean that it can't be used to handle any other task at any time. But it should be when the occasion demands.
Anytime I have a reasonable amount of money, I will easily settle bills that are necessary to be settled, then save the one necessary to be saved. Also I ensure I take out my charity fund, this is the funds that I use in supporting anything or anybody that needs help or support. Then I put some amount of cash in the emergency account. This funds helps to take care of critical issues whenever and wherever the pocket money and savings cannot do, it's the emergency funds that I run to.
Some people think that emergency funds should be that big amount set aside. No, you can start small but be consistent and don't be too tempted to always run to it if the occasion that demands it is not that necessary. You can start with the least amount like $1 and stay consistent, with time you will be amazed by how much you can come up with.
So my emergency funds is mostly from my earnings and I take it so serious , because it help reduce mental stress, too much run around and gives you peace of mind. So start today, you can start small, but you will see the importance in due course.
