After paying off my personal loan and credit card debt early this year, the next item on my to-do list was to save for an emergency fund (EF).
Before I discuss how I came up with my target EF amount, here are details about myself for reference:
- We are a dual income household with no kids. I’m in my late 30s and my husband is in his mid-40s.
- My husband and I are both employees and we keep our finances separate.
- My husband already completed his emergency fund — a year’s worth of household expenses.
- I send a fixed amount of money to my parents every month as a gesture of gratitude. I considered setting up a separate emergency fund for them but my mom recently told me that after all these years they’ve been saving the money I’ve been giving them. My parents are frugal and they live off of their pension. They also have income from a small rental property.
- We have HMO from the companies we work for.
- We have a death/funeral plan.
I considered setting aside 6 months’ worth of expenses when the pandemic started, but since my husband already completed his EF, I thought I would keep mine at 3 months and start investing for my younger sibling’s college education instead. 3 months is just to cover things in case we/I couldn’t access my husband’s funds.
Here’s our household monthly expenses:
|Groceries (e.g., Food, Hygiene Products,|
and Household Supplies)
|Globe Postpaid (Mine & Husband’s)||1,598.00|
|Spotify (Family Plan)||199.00|
|Money sent to family||10,000.00|
Based on the expense breakdown above, 3 months’ worth of expenses is ₱ 166,863.00. However, if we actually find ourselves unemployed, I believe that amount could last us 5 months. My husband and I joined the workforce earning minimum wage and I’m confident we could scale back if needed.
₱ 50,000.00 of my emergency fund is in CIMB Bank. I’m taking advantage of their 3.1% per annum interest rate. The rest is in a regular BDO savings account.
This is my first time setting up an emergency fund. Please let me know if there’s something I should consider. Also, where do you park yours?