Understand your expenses to identify how much you need for your emergency fund. The original version of this article was published on HelloGold.com.
Have you thought about what you’d do if you were faced with an unexpected financial situation? These are usually related to sudden events that you can’t predict, like losing your job, a health emergency, or tax penalties.
Emergencies could happen at any given moment, so it’s always good to be prepared!
The exact amount you should save for an emergency fund varies according to the individual and situation, but the general rule of thumb is having at least 3 months of living expenses if you live alone, and around 6-9 months at a minimum for families. As you get better at saving, you should work towards having 12 months of living expenses stashed away for trying times. But for now, here’s a rough guide to how much you should aim to save!*
*All expense figures are quoted from the EPF’s Belanjawanku Expenditure Guide.
If you live by yourself
Living by yourself means that you don’t have to worry about anyone but yourself. However, this also means that you need to be ready to count on yourself when things go wrong, making it all the more important that you have enough in your emergency fund for yourself.
If this sounds like you, we recommend that you save a minimum of 3 months worth of living expenses.
On average, a single person’s expenses should total to RM2490. Here’s a breakdown of what your monthly expenses might look like.
If you’re married
If you’re married without children, your joint living expenses should roughly follow the same pattern.