4 Easy Steps to Start Your Emergency Fund

Build Your Emergency Fund

No one knows exactly what the future holds. That’s why it’s always better to be prepared. The same rule applies to your finances. That’s why financial advisors usually advice people to build their emergency fund as early as possible. Having an emergency fund is important, so you can always be ready to face anything life brings you.

Building your emergency fund should be one of your highest savings priorities. According to finance experts, your emergency fund should equal to six times your monthly income. That means that if your monthly income is PHP 30,000, your emergency fund should be more than PHP 180,000.

An emergency fund is a portion of your savings that you will only use for emergencies, like unexpected expenses. This fund shields your bank account from having zero balance, or otherwise, prevent you from loaning money.

So how can you start saving up for your emergency fund? Well, here are four easy steps on how you can start building your emergency fund.

Step 1 – Track your monthly income and expenses.

The most effective way of improving your cash flow is by studying it. So start by recording all the amounts of money that goes in and out of your hand. You can start by creating your finance tracker sheet on your computer, through a mobile app, or by writing it down in a piece of paper. Make sure to include recurring expenses like rentals, utility bills, and food allowance. You should also track down miscellaneous expenses such as movie tickets or lunch outs.

Step 2 – Set a goal for your emergency fund.

Ideally, your emergency fund should be able to cover three to six months’ worth of your living expenses. The idea came from the hypothesis that if you lose your job, you have the ideal amount of savings to sustain your living expenses for three to six months, assuming that after that period you’ll be able to have another stable source of income.

Step 3 – Build a plan so you can start saving.

Setting a goal and creating your plan to achieve building your emergency funds goes hand-in-hand. For example, if your goal is to save PHP 180,000 for your emergency fund, you need to set aside PHP 15,000 for twelve months. Once you have created your plan, make sure to stick to it. Although this may be the hardest part of saving, remember that if your goal is realistic, it will be easier for you to stick to the plan.

Step 4 – Put your emergency fund in an accessible place.

The best place to put your emergency fund is in a place or account where you easily withdraw it, mostly a debit ATM card. This way you’ll be able to get your funds easily without the need to go through a lot of paperwork or wait for days for the fund to be transferred to your bank account.


Starting an emergency fund is necessary for building a stable block for your financial stability. As long as you have the goal and the focus to reach it, I’m sure you’ll be able to save your emergency fund in no time.

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