What is Emergency Fund

 What is emergency fund.

I guess most of these content can be found in the various websites on emergency fund. The definition of an emergency fund is a stash of money set aside to cover the financial surprises life throws your way.

The surprise could be loss of job, Medical emergencies, major household repairs, sudden move due to transfer to a new office from work.

 

How I approach my own emergency fund.

One of my favorite word come up when I was studying my part time master degree is... It depends. It will make you sound intelligent as well.

It really depends on your circumstances.

For my circumstances,  I left my full time work 2 years ago to went for a part time work while studying my Master degree. From a cash flow point of view, my income is dependent on the number of hours worked. So the main concern will be able to support myself.

Thus, my income is not longer a fixed amount but a variable amount depending on the workload of the day. That affected my savings,where in some month, I will depend on my savings to support myself. As I am using OCBC360 account, I also lost the interest gain from the salary component.

In addition to that, I would also need to pay for my own tuition fees for my part time Masters.  I decided back then that I would set aside 10 months of expenses. This also takes into account of the time to find a job after I completed my studies.

Moving forward to today, I had managed to find work back in May, with a regular and consistent income, I reduce my emergency fund gradually back to 6 months of expenses and the rest will be used for investment. 

To conclude, the topic on how much emergency fund one would need depends on the circumstance of the person.