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According to consumer finance, An emergency fund is a cash reserve that's specifically set aside for unplanned expenses or financial emergencies. Simply put, emergency funds as the name suggests are for emergency purposes. The importance of having emergency funds cannot be overstated. Life is tricky. Life is unpredictable. One moment, you are fine and doing well financially, and the next moment, you hit rock bottom with nowhere to go and no one to turn to. When it comes to managing money, one thing that is certain is that unexpected expenses will occur. This is why it is very important to have a backup plan. This is where emergency funds come in. Having savings set aside will save you from financial disasters.
Growing up, one of the most valuable lessons I learned from my dad was the importance of managing money wisely. My dad would always tell us (my siblings and I) that if you work hard to find money, you'll learn and know how to spend money wisely. My dad taught me how to spend money wisely, prioritizing our needs over wants. As humans, our wants are insatiable, and this is why we should prioritize the important ones (needs.) He also taught me how to save for rainy days. My dad had a very big locally made piggy bank where he kept his savings. I remember the time he bought small locally made piggy banks for my siblings and me. Thanks to my dad, I understand the value of being prepared for rainy days and making good financial decisions.
As students, it is expected that emergency needs will come your way. It is not a matter of if, but when. You'll face emergency needs like buying handouts, paying fees, and settling one financial issue or the other. The most challenging part is that these things arise out of the blue when you are not prepared. That is why it is important to plan. Prioritizing your needs, spending wisely, and setting aside a certain percentage of your income or allowance can help you tackle unexpected disasters effortlessly.
I would not consider myself a professional when it comes to making good financial decisions. I don’t make perfect financial decisions, but at least, I try my best. I have been in tight spots before where I had to make use of my emergency fund. But one situation that is still fresh in my memory happened last month. At the start of every semester, I make it a habit to set aside a certain percentage of my money for emergencies. I usually keep it in cash, so I can access it easily when needed. I'm always determined not to spend the money on frivolous things but for emergency purposes. I store it in a safe place in my wardrobe. Usually, I place it carefully in a small box and place it in a hidden compartment. This way, I know it's secure and out of sight.
It was close to the exams. During exams, students often experience issues with foodstuff, as they would have consumed almost everything before the exam period. One week before the exams, I used almost all the money in my bank account to buy foodstuffs that would last me until the end of the exams, and then I would go home. Out of the blue, the exam officers made it compulsory for every student to pay for the departmental and faculty dues. This meant that without the departmental and faculty dues receipt, I would not be given the exam permit, and by implication, I would not be allowed to write the exams. Luckily, I had my emergency fund. I rushed home and paid for the fees. Without the emergency fund, I would have been running helter-skelter.
Life is unpredictable. Having an emergency fund will help you tackle unexpected financial disasters. I recommend that everyone cultivate the habit of building an emergency fund.
This is my entry to the India United contest. The theme is; emergency fund.