Thursday, May 23, 2013

Emergency Funds and Invest-able Funds

It's school time once again, and many parents are spending for their children's education. I've just finished watching the late night news and I saw that the schools are getting ready for the upcoming school opening. With this also comes the stores and kiosk that are selling books and school supplies at an affordable cost. Parents are trying to look for wallet friendly buys for their kids. 

That is a good thing. With the economy that is going on about our country, it is important to be economical and practical. Though many of us would say that it's important to save on the stuff that we buy. It is also important to consider saving the money that is left of us after all the important expenditures.

Though, tuition, books and school supplies are important things to buy this season. It is also important that we realize to turn the rest of the money we used to buy into two different kinds of Funds we need in our lives. That is to put money into our Emergency Fund, and Invest-able Funds.

What is the difference between the two funds? Here let me explain:

Emergency Fund - This is the money that you put aside to be used for emergency purposes. This is your "I'm in need" piggy bank. Ideally it should contain an amount of your three to six month salary. Why? Financial experts suggest this so that if something inevitable happens, i.e. loosing a job, it is a known information that the usual time frame for a person to be able to find or get a new job would be in about three months. 

Where should we put our emergency funds you may ask? Well, you can make a bank account savings for it. Piggy bank is fine only when you don't intend to earn from your savings, but always try to remember the adage that, 'a penny saved is a penny earned.' The bank will only give you 1% interest (current bank interest rates nowadays) but at least your money can grow from there. Also remember to circulate your funds in your bank. Some banks charge fees for dormant accounts. So this means, even if you have already reached your goal amount for your emergency fund you keep putting in more money for some cash on hand for future purposes. 

Invest-able Funds - These are funds that is a portion of your money you decide to put away for investment. If you feel that you are a person who is not into business. You don't have to pressure knowing how to build one of your own, although it would a  brilliant idea. In order to secure your future, you can at least learn how to make money work for you instead of working so hard for it. We'll you'll work a little hard for it at first of course, but once your emergency fund is set you can make more money by investing them in financial vehicles that can provide you better returns for your hard earned money. This way, you'll have less worry when you get older. 

Both emergency and invest-able funds have it's own social and psychological cost. It is because it will require you to have a lot of discipline in yourself in order for you to save and invest money. Notice how our generation is hand cuffed to consumerism. This is the main reason why people who can't afford to buy the things they want are drowned in consumer debt. Sometimes it's the covetousness in us. 

As was mentioned in the scripture, I can also relate that disciplining ourselves to save and invest our money needs some 'bridling of our passions.' If being a shopaholic is your passion then, let saving be your passion now. No need to covet our neighbor's lovely things. You'll thank yourself one day for being able to satisfy the demands of delayed gratification. 


  1. (At the risk of getting your knickers in a twist:) You have a valuable message, but you desperately need a proofreader. I volunteer. Please run blog posts past me first. Emil kennita at kennita dot com . Thans!

    Live long and prosper,

    1. thanks Kennita, yah I know I do need a proofreader badly. I'll email you soon.