Rainy Day Funds

I think it's apt to start talking about our emergency funds today because they're supposed to be our buffer against the proverbial rainy day, and look, it's been raining incessantly for the past few days!

I opened a savings account (SA) about a year ago with the intention of building our emergency funds there. The idea was to save at least 6 months worth of expenses to dip into if needed. And within a few months of opening that SA, I succeeded in wiping out what little I had deposited there. Despite my intentions of socking away cash regularly and not touching it under pain of death, there were credit card bills and insurance premiums that needed payment, and yes, the occasional shoe purchases here and there, that defeated my noble plans.

I opened a second savings account a few months back and was more successful with my hands-off policy this time around because of two things:

  1. I had paid off all my credit card debts- with my first attempt, I couldn't save as much as I wanted because of credit card debts, and it seemed ridiculous to keep money in the bank at less than 2% p.a. when I was being charged 3.5% MONTHLY by my bank. So first things first, clear all credit card debts before starting an emergency fund; and
  2. Our 30sqm shoebox of a home wasn't conducive for hoarding stuff- I love shopping as much as the next girl (shoes are my poison of choice!) but I love not tripping over stuff more. When it became apparent that I was spending more of my weekends putting stuff away and dusting the mountains of things I had accumulated, than actually recharging my batteries, it was time to rethink my attachment to stuff.
Some people have a set amount that they deposit every month in their emergency funds, but while I follow that principle with my stock investment, I usually rely on bonuses and windfalls to build up our emergency fund. So far, I haven't missed a month yet, but I'm thinking that if I don't receive extra money for a particular month I should at least bank Php5,000 from our regular income, just to keep the momentum going.

To date, our emergency funds are sleeping peacefully in a regular savings account, but once they reach Php100,000.00 or so, maybe I'll start shopping around for slightly better rates than a SA, but with the same convenience (time deposit?).

*Image from languedoc-roussillon


Lianne said…
I'm curious, which bank do you stash your emergency fund in? Do you and your love share the same emergency fund account? :)
Jillsabs said…
Hi Lianne!

I put our emergency fund in a regular savings account accessible via ATM (kaya dapat may self control:p). I'm the only one actively saving for our emergency fund but I sometimes ask my hubby for contributions when I'm about to make a deposit to our EF.

I'm the one obsessed with personal finance and financial planning in our household, but he's very supportive and he's my sounding board for any money saving idea I may have.
Lianne said…
Thank you for responding. :) Wow, dapat talaga! ATM, e. ;) It's great he's supportive! :D
Hi Jill,

Like you, I'm the "investor" in our relationship. :) Instead of TD, you may want to put it in SDA. It's like TD with 30-day term, but the rate is much higher. I placed my SDA in BPI since the required amount is lower (only 50K, unlike other banks which require 1M). The rate that I got is 2.6332% net of everything. :)
Jillsabs said…
Thanks for the tip! Will surely look into SDAs, moreso now that I'm nearing 50k on our EF.
tessa said…
have you considered getting a portfolio manager?
Jillsabs said…
I'll look into that, but at the moment, my portfolio is pretty slim and doesn't need professional managing:p

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