Budgeting My Way to an Emergency Fund

My emergency fund is a constant work in progress. I do put money in it regularly, but I also loot it with embarrassing regularity to fund non-emergencies like buying airline tickets and lending money to family members. 

I dip into my emergency funds with abandon because I have a job and windfall season is coming up soon, so I can easily replenish the money I took out. Besides, I have 3-4 months worth of expenses in my account with my office's savings and loan association and it's easy to withdraw money from that.

But then the lockdown happened and I had less than a month's worth of expenses in my savings account and there was no way to access my investments in the savings and loan association. Thank goodness that government workers continued to get paid on schedule and the Judiciary even topped up our regular pay with several small bonuses. As it turned out, I didn't even have to touch my measly emergency fund because my salary arrived on time and banks were open so I could withdraw my cash.


I got lucky there, but what if the government was not as prepared and could not pay its employees? What if the Judiciary couldn't release salaries on time? What if my family had to rely on my emergency funds?

We'd be in a pickle for sure with only a month's worth of expenses within easy reach.

Which is why I must make sure that I have 3-6 months worth of expenses tucked away in a savings account, ready to be accessed in times of real emergencies. I got lucky this time but it won't always be like this, so get serious Jill!

From experience, I know that I'm better at paying down debt than I am with saving money because I make debt payment a line item when I make my monthly and quarterly budget forecasts. On the other hand, how much I save per month varies depending on my monthly expenses and bonuses received. Thus, monthly savings can go from a low of zero to as high as Php70,000.00. Moving forward, I have to set a minimum amount to be saved per month regardless of projected expenses and scheduled windfall. 

Adopting a set amount as savings and then leaving the rest to be spent, is also known as the Anti-Budget Budget and it's probably the easiest budgeting system known to mankind, which is why it's the tactic I embraced. But if you want to know the other types of budgeting systems, check out the Top 5 Budgeting Techniques from BPI-Philam.

My budgeting style leans closer to the 80-20 Budget, but savings and investments are not limited to 20% and the 80% for expenses is categorized (similar to the Envelope Method).

Personal finance is ultimately personal and it's up to you to find the system that works best for your needs, temperament and situation. Hence, feel free to adopt an established budgeting method in its entirety, tweak it as you please or create a blend of two or more methods. Sky's the limit folks and you're only limited by your imagination.

I hope everyone remains safe and sane during the lockdown!

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Unknown said…
This post is so relatable! I also have an on and off relationship with savings. Need to keep up for the emergency fund as well. Thank you for this post. Stay safe!
Jillsabs said…
You're welcome! Do stay safe too!

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