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Emergencies happen all the time. In most cases, an emergency would require you to spend some cash. It could be a lost phone, an immediate car or house repair needed, or a medical emergency. Without an emergency fund, you might be forced to spend your savings, use your credit card, or consider emergency cash loans. These options might sound good at first but it can quickly shoot your budget down.

With a separate savings reserved for emergencies, you can prepare for any other crisis that might come your way. So how do you build your emergency fund well? The rule of thumb is that you save at least six months’ worth of your living expenses. Taking such an amount from your salary might become too hard. But there are simple and effective ways on how you can build up your emergency money and be ready for any emergency. Here they are:

1. Record your spending

If you want to maximize your savings for an emergency, you should record how much you spend on food, transportation, utilities, and any other thing. See if the money you spend on each one is really necessary or you just spend because you like to. If you always end up empty handed every payday because you have to “spend”, then you are likely to get emergency cash loans just to fund your emergencies.

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2. Choose better rates for everything

If you go to the market to buy things, try buying things for much cheaper than their original prices by bargaining. If you have an insurance, a credit card, or any other service provider, you can also ask them if they could provide you with better rates. Always shop around to get better deals. There will always be shops and providers that will provide cheaper prices than others.

3. Start small

If you need at least ₱10,000 a month, then your emergency fund should at least be ₱60,000 to cover six months of your living expenses. Instead of overwhelming yourself, try to start saving small. It doesn’t matter if you can only save up ₱500 or ₱1,000 a month. As long as you make it a habit, then you can save up your emergency money in no time.

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4. Cut back on your living expenses

Sometimes, you just have to tighten your belt if you want to save. In the same way, cut back on your daily expenses if possible to save as much as you can. Instead of buying your lunch outside, cook your own meals at home. Bring your own baon at work. Avoid takeouts. Do your own nails and carpool if you can instead of buying fuel for your car.

5. Save a bit from your paycheck

It’s true that building your emergency fund out of your salary is a bit difficult. But you can make a habit of setting aside a small percentage of your salary for emergencies every time you get your paycheck. This is easier compared to saving a very large chunk just to fill your emergency savings account.

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6. Keep your changes in a jar

Change, especially coins, do not look much when taken into account. Why not try saving all your change and putting them in a big jar? Once you fill up the jar, you will be surprised with the amount of money you already have. Now you can move this amount to your savings account reserved for emergencies.

7. Sell some of your old stuff

If you have plenty of stuff that you don’t need anymore, sell them. De-clutter your closet. Put it up on sale on eBay or any other similar e-commerce sites online. Not only will you have a cleaner house, you will have more money for your emergency fund.|

8. Use your tax refund

Tax refunds are given yearly. Instead of spending it on clothes or any other thing, deposit it in your emergency account. This is much better than buying new clothes or shoes or splurging on food.

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9. Supplement your income

If it’s possible for you to work two jobs, one full time and another part time, do it. A second job is one of the best sources of emergency fund as long as you dedicate the money that you’ll get from it for emergencies. You can also do a side business if you don’t want to work a second job, whichever may prove more convenient for you.

10. Put everything in a bank

It would be useless to keep your emergency with yourself. The tendency to spend is more likely because you have money. To avoid this, make sure that you put your emergency fund in a separate savings account. Do not merge it with your regular savings account to avoid spending it as well.


Choose to be proactive. Work out your emergency fund now. If you are looking for more insights on personal finance, visit GoBear’s blog.