Ideally (and rightfully), we should have health insurances to cover big and sudden medical expenses and emergency fund for other unexpected life events that may happen. Before trying to grow your investment basket, you should first set aside an emergency fund equivalent to three to twelve months’ worth of living expenses. If you think your emergency fund is too big to be kept in your savings account with a bank, you can opt to invest some of it. But, make sure that you invest them only in highly liquid and low-risk investments.
Unfortunately, many skip this stage as they are too eager to earn passive income and therefore jump into investing, myself included, while others are caught by emergency situations during the build-up stage. When your emergency fund is still zero or low, it is important to have ready back-up plans (A, B and C) so you don’t panic once an emergency occurs. Here are some of my back-up plans during the time when I was still building up our emergency fund:
1. Always update your SSS/GSIS, PAG-IBIG and Philhealth records. The same is true for your membership in cooperatives, provident funds, employees’ association, and insurance policies. Know the benefits you can get from them. Be familiar with your policy maturities, loans being offered and other benefits and assistance you are entitled to for being an active member.
2. Leave credits. Some companies and organizations allow monetization of leave credits. So, hinay hinay muna sa travel. 😊 Avoid tardiness. Save those vacation leaves and know how to monetize them. Avoid getting sick too so you can get any SL incentives available.
3. Take good care of your belongings. If you think you own things which can be converted to instant cash, then take inventory and sell them off. The better their conditions, the more handsome the proceeds will be. Collections, especially those which are rare can be sold to other collectors. Gadgets and jewelry can be pawned or sold too. However, it is likely that you will get an amount much lower than you would want to receive. Personally, I think that selling your possessions should be your last resort because if it’s against your will or out of your need, it may add discomfort, self-pity, and sadness to your already troubled situation. However, instead of borrowing money from other people, I think okay na rin to sell the things you own. Take note, though, it’s not easy to find a buyer, moreso, some people might take advantage of your need.
4. Borrow money from your trusted ones or apply for a personal loan, as long as you know you can repay them. For higher chances of being lent wit money, present how you plan to repay them. There is nothing wrong or immoral about borrowing money. What’s not good is breaking their trust in you by not giving back the money you owe them.
5. Before you consider selling your things and borrowing money, why not try collecting money from your debtors first. Well, it could be equally hard as to selling items but at least it’s your money. Some people just don’t pay you back even if they already can. Maybe they forget. Maybe they are too busy. But, once you tell them you need your money, they may be quick to give it back to you. Who knows, with interest pa!
6. Also, better than borrowing money, whether from friends, family or banks, is liquidating or terminating your investments. Again, at least it’s your own money. Somehow it gives one pride and more dignity during financial crisis if he/she does not bother anyone else.
You may have realized by the end of this post how important creating emergency funds is. There will be times in life when you can rely on no one else but yourself. Not because you valued the wrong people or they are unreliable during your times of need, it may be because they really have nothing to help you with. Baka may struggle din sila. So, better to be prepared. But, keep in mind that these are just human preparations, true and solid security comes only from our faith in a Higher Power.