An unexpected incident happened to my close friend today which made her very sad as she had to dip into her savings, I asked if she didn't have an emergency fund, and she reminded me of the amount she earned as well as the responsibilities, I understand how this economy can make one forget about saving talk more of having an emergency fund, but it was a good thing she had savings she could run to today, that saved her from getting into debt.
The reality of life is that, emergencies can show up at any time, and our lack of preparation will not stop them from showing up. Emergencies may come in form of job loss, sickness, or an unexpected repair. The most appropriate way to meet up with these unplanned expenses is through the availability of an emergency fund. With all things being equal, the emergency funds will be sufficient enough to cover living expenses and avoid debt.
Emergency funds should be thought of as a type of insurance policy that protects against unexpected expenses. It is the cash reserve that is set aside to solely cover daily living cost when an emergency pops up through life's journey. Examples are, medical emergencies, unplanned car repairs, loss of a job, unplanned home repair, and sometimes an unplanned travel expense.
With an emergency fund starched out in a corner, you have an assurance that you can handle life uncertainty to a reasonable extent without immediately running into debt or selling off your commodities as the saving grace.
We are now aware of the need to have an emergency fund, the next thing we must know is how to keep it, since it is an emergency fund, you must have quick and immediate access to it. The money you are spending for day-to-day activities should be kept separate from your emergency fund to prevent easy access to withdrawal.
Saving enough money to sufficiently cover up to three months of your living expenses is the most appropriate way to set aside an emergency fund, but keeping little money aside from time to time will make a huge impact eventually.
That you are starting small does not mean you should remain small, make an effort to boost your confidence by increasing the amount in your emergency fund.
With enough discipline to eliminate some unnecessary spending, you should be able to meet up with your target in no time. If you think about the things you spend money on, you will be able to eliminate some of the unnecessary luxuries like expensive entertainment, and eating out until you can afford these things comfortably.
Relying completely on one income stream is dangerous, especially with the increasing level of inflation, income diversification by exploring other side hustles will make it more convenient to meet daily needs, and have some spare funds for savings and emergencies alike.