Building Your Ark The Right Way: Emergency Fund Essentials

by Jerecho Placido, MBM

According to scripture, many people called Noah crazy for building a very big ark on top of a mountain in a time of drought. But when the floods came, Noah and his family survived, while those who mocked him perished.

Noah’s attitude about building an ark on dry land is the same concept as you having an emergency fund. One needs to make sure it is built big and strong so it could withstand the harshest calamity. However, it’s not just a matter of if and when the floods will come, but also of knowing how to survive should the unfortunate time arrives.

The following are essential tips on how to build a robust emergency fund.

  1. Save at least 3 months worth (or more) of your income for your emergency fund. If for example you are earning Php 30,000, you should have at least Php 90,000 saved. Why? So that even if you lose your job today, you will have money to tide you over for the next 3 to 6 months, giving you ample time to find a decent replacement income. So on the first month of losing your income, you have a third of your total emergency funds (that is, Php 30,000 which is the same amount of money you made when you still had a job). So basically your back is covered for the next 3 months, or until you get back on your feet again.
  2. Emergency funds should be deposited in the regular ATM savings account of your bank. Do not worry about the 0.25% per annum return minus 20% tax. You are sacrificing interest for the sake of liquidity. You need to be able to quickly access your money during the time of the emergency.
  3. Your emergency fund should cover you if you lose your job or experience a sudden unexpected crisis. However, there are situations when other types of fund should cover for these unexpected crises. A healthcare emergency requires a healthcare insurance. A sudden loss of life requires a life insurance. College tuition fees should have been prepared a long time ago through a mutual fund. Loss of income through retirement should be covered by a retirement fund.
  4. Build your emergency fund big and strong, just like Noah. The ark he built saved his family. It was so robust, they and the animals they took with them survived until the flood subsided. Your emergency fund should cover your family, too, and it should last until the emergency has passed.
  5. START NOW. Knowing about these essentials is one thing, but applying them is even more critical. Noah knew about the flood because God told him about it, so he built an ark so he and his family could be saved. We all know our job or business is temporary. Anything could happen at any given time. So, what are we going to do about it? When are we going to act? Remember, it wasn’t raining when Noah built the ark.

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