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A-Z for personal finance: E is for emergency fund

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Life is full of uncertainties so it is important to set aside a sum of money, a cushion, to alleviate the shock of a completely unexpected event that leads to unplanned expenses.

Far too many of us are completely unprepared for a financial crises and can caught off guard. No matter how meticulous or organized you are about your personal finances, emergencies do happen when you least expect them and can sneak up on you, disrupting your budget so severely that it can take you several months or even years to recover.

How much should you save?

If you don’t have any savings at all, the key is to start with a small amount. This will take some time to grow but will encourage you to develop a saving habit; over time you can slowly start to increase your contribution to your fund. In general, a minimum of about three to six months of living expenses should be set aside.

 

Nimi-AkinkugbeThe full text appears in “A-Z of Personal Finance” by Nimi Akinkugbe. Available in leading bookstores including Glendora Books, Laterna Books, Patabah, Terra Kulture, Quintessence, Jazzhole …and online from Jumia, Amazon, Barnes & Noble, Manna Books and AMV Publishing

 



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