An emergency fund is money set aside for unforeseen circumstances. A quick repair, an unexpected job loss, a health incident, etc. It is meant to be easily accessible without the dormancy of a current or savings account.
#1 What is an optimal size for an emergency fund?
While there is no hard and fast rule regarding how much should be in your emergency fund and for how long, there are some guidelines to abide by till you become financially free. Freedom that doesn’t require emergency funds at all. Firstly, your emergency fund should roughly equate to at least two months’ salary or six months of living expenses. Whichever is higher.
“Doing the same thing over and over, and expecting different results is insanity” – Albert Einstein
#2 Where should my emergency fund be invested?
Ideally, your emergency fund should be invested in a liquid, low interest, low risk instrument. An instrument without withdrawal penalties or a fixed tenure of any kind. ZSave comes to mind here, with relatively higher interest rates than your average savings account, instant withdrawals when you need your funds (weekends included!), among other perks.
#3: How does this fit into my other goals?
We are of the opinion that you need different vehicles to achieve your goals. An emergency fund can simply be looked at as a cushion to cater for unforeseen circumstances like a job loss or major medical issue without putting undue stress on you. Ziing can help you build your emergency fund. Simply set up a ZSave account where you can access your funds just by the tap of a button.
Ziing can help you achieve your financial goals. Simply set up the fund on ZPlan , input your target amount and deductions will be automated for you. Upon maturity, your funds will be automatically moved to your ZSave account where you can access them by the tap of a button.
Cheers to an amaziing ride!
The Ziing Team.