When Can Emergency Funds Be Used? This Is The Answer And How To Prepare It

Illustration of calculating emergency funds (Freepik)

YOGYAKARTA It turns out that not everyone knows when emergency funds can be used. In fact, frequent emergency funds mix with savings funds used to buy certain items.

In order not to misappropriate with emergency funds and their use in finance, it would be nice to know what emergency funds are and when is the right time to use them.

As the name suggests, emergency funds are funds that are stored and intended for certain conditions related to emergencies, aka urgent.

Quoted from the OJK website, emergency funds can also be interpreted as funds stored for emergency conditions such as accidents, house damage, or funds prepared when subjected to sudden termination of employment (PHK).

From this understanding, it can be concluded that emergency funds may be used during emergency or urgent conditions. No matter how big or small, emergency funds are used to pay bills that appear without plans or are not monthly or routine expenses.

However, it should be noted that emergency meaning needs to be emphasized more clearly because some people think that emergency conditions actually lead to less important things such as holidays or entertainment, buying a house even though they already have one, and much more.

Placement of emergency funds must also be carried out separately from other funds. This fund should also not be considered as a deposit fund that is part of the savings in the purchase of goods. This fund is not used to buy consumptive goods. On the other hand, these funds are useful for personal and family security.

Everyone is advised to have emergency funds because it will help them overcome financial problems. The benefits of emergency funds that can be felt are as follows.

Everyone has their respective financial strategies to prepare emergency funds. Some ways that can be done are as follows.

This method is the easiest and simplest way to allocate income to emergency funds, namely by cutting monthly income. The amount of the discount itself can be adjusted to your ability, it can be 10 percent, it can be 5 percent, 20 percent. However, it is recommended not to be too big because it will interfere with your financial condition.

If you are someone who has uncertain income, saving cash can be one way to save emergency funds. Saving cash can be done every time you get a reward for an uncertain job. For example, you are a painter who sells his painting at an uncertain time that can be every 3 months, once a month, even once a year. When you succeed in selling the painting, it is recommended to immediately save cash which is intended for emergency conditions.

Emergency savings are not only in the form of money, you can save for emergency conditions in the form of gold. This tube is quite profitable considering that gold did not experience a significant decline. Even gold savings are quite recommended to overcome your emergency.

That's information about when emergency funds can be used. Visit VOI.ID to get other interesting information.