COVID-19: Absence of Contingency Fund

Mahirap pag mahirap': Taxi drivers, vendors idinaing ang mga ...
(image from ABS-CBN)

One of the harsh realizations of COVID-19 on Pinoys Personal Finance is the absence of a contingency fund. While I may submit that most of us live on a hand to mouth existence or obtain our source of livelihood on a day-to-day basis, even those who were employed does not have the contingency fund to answer for the abrupt disruption of their sources of livelihood.

Some were able to cover their cost of living for a month, most were are already relying on government financial assistance just to survive. This shows that most of us do not have a contingency fund for unforeseen events "mahirap maging mahirap"(it is hard to be poor).

A contingency fund ideally amounts to at least a three-month cost of living expenses, to answer for needs in times where no income is earned due to loss of work or disruption of work. This should be liquid assets in cash or savings in your deposit account.

How to set-up your contingency fund (PAL):
1. Pay yourself first
2. Automate your savings
3. Leave it Alone

The need to establish a contingency fund is now more relevant than ever, the uncertainty brought about by the COVID-19 pandemic requires to be steadfast not only for our health but also on our finances. Even with a contingency fund, "bawal magkasakit" (it is forbidden to fell ill).

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