Emergency Fund and Investment
Money, for some people, this one thing is hard to come by, difficult to manage. Actually, it's not difficult to manage, but sometimes it's hard for us to control ourselves so we don't use it too much. However, lately more and more people are financially literate and decide to use some of the money they have to invest. Unfortunately, investing is often the only thing that comes to mind when there are other important posts too.
Before deciding to invest, one of the things that you should have but often don't think about is an emergency fund. Don't be one of those who don't care.
An emergency fund is an important thing to prepare because many unexpected things can happen at any time
Emergency funds are funds that are provided to deal with if an unexpected condition suddenly occurs. This money will be used when there is an emergency that requires a certain amount of funds that cannot be taken from the normal budget that has been prepared. That is, the time of use is not yet certain, but it could be tonight or tomorrow morning. Examples of usage times that we can see during this pandemic, for example when you are laid off and haven't found a new job, can also be when a disaster occurs suddenly such as flooding, accident costs, and so on. This is different from investments which are usually planned for a certain period of time.
The amount of emergency funds needs to be adjusted to each individual's needs, although there is no nominal benchmark, but there is a benchmark for the share
Everyone has expenses with their respective nominal, so usually these expenses will be used for calculating emergency funds that need to be prepared. Reporting from several sources, these funds are also adjusted to the number of dependents at that time. For example, if you are single, the funds that need to be prepared are usually 6 times the total monthly expenses, if you are married and do not have children, you need to prepare funds amounting to 9 times the amount of expenses, while if you already have children, the saved funds can be allocated 12 times the total expenditure in a month. household.
Emergency funds are important but are often underestimated even though this budget will save you from bad financial opportunities
Various disasters can occur at any time which sometimes makes you have to spend some money, even though usually the monthly budget has been prepared only according to the needs needed. If an emergency fund is not prepared even though the unexpected happens, then chances are you will be forced to use savings that will actually be used to prepare for the future. This will damage the financial plans that have been prepared so far. It's wrong not only to run out of savings money, you can also be in debt.
Although investment is important, emergency funds are no less important, if possible, both go hand in hand
If you still have a lot of money outside of the monthly expenses that have been arranged, then you can enter both an emergency fund and an investment at the same time. However, if the remaining balance is not enough for both of them, then keep in mind that the funds invested are usually more difficult to disburse so they cannot be withdrawn whenever you need funds for something emergency. Not to mention there will be a risk of experiencing a loss, this will make it difficult if it turns out that the loss occurs at the right time when you also need emergency funds. So you should prepare an emergency fund first, only if it has been collected and has 'idle money' then you can use it for investment.
Investment is an important thing to do to get passive income as well as to prepare for the future, but if you can, don't just go along with it, it must be taken into account. Don't forget other budget items that are no less important like an emergency fund.