How to Compute your Emergency Fund? How much Exactly do you Need?

Have you been in an Emergency Room?

Maybe some or most of you have a share of their experiences in an emergency room.

But I will tell you with a doctor’s point of view.

Being a doctor, I am not immune with all the emotions surrounding the Emergency Room (ER), the drama, the sadness and elation.  Of course, I can say that, I just had the ultimate training on not showing it to you.  Or else, you might be more nervous than you already are.  ER has taught me 3 things in life.  Here they are:

1. Everything in life is uncertain. 

I witnessed dying of a 80-year-old grandfather because of a VEHICULAR ACCIDENT and a 30-year-old father dying of a HEART ATTACK.

2.   Since life is unpredictable, we should all be ready. 

• We might not be able to teach our minds and hearts to be really ready, but our WALLET should be.  It is the only thing we can prepare to be READY.

3.  Life must go on. 

• After witnessing several deaths, sickness, and healing in the ER, life must go on.  It will be just another day, tomorrow, it will happen again and the next day.  Again and again.

Of the 3 lessons above, only one thing we can prepare for, our lifeline for emergencies, our EMERGENCY BUFFER FUND.

EMERGECY BUFFER FUND (EBF) – is money set aside in case of emergencies in life.  Be it health, death, accident, loss of job or sudden catastrophe that needed immediate funding.

How to compute:

EBF = (Monthly Living Expenses) X 3   (If Employed)

EBF = (Monthly Living Expenses) X 6   (If Self-Employed)

Example:

Doc Ryan, a resident physician has a monthly salary of 15,000/month

His monthly expenses when totaled (food, shelter, transportation, other expenses) = 12,000/mo

Since he is employed:   (12,000 x 3) = EBF should be 36,000 – this should be kept in a bank or safe place where he can get it easily in case of an emergency

This will also mean, that after residency, with no steady income to expect, he has 3 months to survive until EBF runs out.  This will give him enough time to settle his own practice and give plenty of opportunity to strategically plan his next move and get himself a new source of income.

Now, do this on your own, compute your average monthly expenses, then multiply it in the right multiplier.

EBF = (Monthly Living Expenses) X 3   (If Employed)

EBF = (Monthly Living Expenses) X 6   (If Self-Employed)

Have you set aside enough funds in case of an emergency?

If you answer no, this is the right time to start saving up.  Yes, this may take you a while to build up.  But, this will save you from the shame of “borrowing from someone” in case an emergency arises.  Be responsible, take charge of your future.

Be financially literate.  Know how to prioritize your finances.  All you have to do is act now!  Subscribe here. It’s FREE!

If you need a more personal approach in helping you be financially ready, contact me here.

The more the merrier, let me help you and your friends.  Invite me for a group presentation. 

The following two tabs change content below.

• Bio
• Latest Posts

Pinky De Leon-Intal, MD, RFC

Doc Pinky is a licensed Medical Physician, Internationally Registered Financial Consultant, Certified Investment Solicitor and Associate Wealth Planner and Estate Planner of the Philippines. She loves to educate and spread financial literacy. She is a Lactation Consultant. She loves to travel. She is a devoted wife and mother.

Latest posts by Pinky De Leon-Intal, MD, RFC (see all)

• Say Goodbye to Chronic Lifestyle Diseases (Hypertension, Diabetes, Cancer, Gout, etc.) with Right Food and Right Water - 23 May, 2023
• Embracing Superpowers: A Mom’s Journey as a Doctor, Professor, and Financial Consultant - 19 May, 2023
• Celebrating the Power of Women: Honored by Philippine Daily Inquirer - 17 May, 2023