Emergency is a word normally associated with facts, occurrences in our lives, which are unlikely to have a positive meaning.
And, unfortunately, among the many certainties we have, is that all of us, at some point, will have an emergency. Therefore, here are the 3 Steps to get an Emergency Reserve.
An incident within the family, a difficulty in your personal economy, a fatality at work, can happen.
Any such eventuality can leave a person unprepared and in a bad situation.
One of the most frequent forms of emergencies, often associated with the crises the country faces, is related to money, or the lack thereof.
As a way to prevent these unforeseen events or fatalities, anyone can create an Emergency Reserve.
What is Emergency Reserve
The Emergency Reserve (or Emergency Fund, as it is commonly called) is an amount saved for possible eventualities;
Such as: serious illnesses in the family, sudden layoffs at work or perhaps even the unexpected arrival of a child.
This cash reserve can be generated through personal savings actions.
It must be understood as a necessary value, which will help in overcoming complicated periods, caused by these unexpected events.
It is estimated that 70% of the Brazilian population has not saved any amount of money to constitute an Emergency Reserve.
This means, without any doubt, that the personal economy of the vast majority of these people will be shaken in an eventuality of this nature.
The importance of an emergency reserve
It is no coincidence that the majority of our population does not have an Emergency Reserve. This is a culture problem.
Our population lives within what we call “immediacy”, that is, they spend everything now without worrying about future expenses.
Among the most common reasons that lead people to suffer the consequences of immediacy;
There are debts and financing taken out to acquire material goods such as state-of-the-art cell phones or new cars, for example.
In practice, without an Emergency Reserve, a person who has a monthly income of R$ 3 thousand and loses their job will have their income reduced.
If there is financing, she will certainly have to take out a loan, increasing her debts even further and worsening her situation.
How to create an Emergency Reserve in 3 steps
Having an Emergency Fund is essential for anyone, whether they are employed or not.
Preparing and planning your personal economy helps maintain balance in your financial life.
As a way of starting to act, even before problems happen (as they will happen, one time or another) a real revolution must be made in the way of managing earnings and expenses.
The recipe is simple, but not always easy, so pay attention to the 3 steps we suggest to help anyone create an effective Emergency Reserve;
Allowing greater peace of mind to overcome the obstacles and challenges that life presents.
1. Study the subject or seek professional help
There are two very effective ways to create an Emergency Reserve. The first is for the person to seek information and become knowledgeable on how to do so.
This is the cheapest way, as you won't have to pay any fees.
However, nowadays it is said that “time is money”. For some people, the possibility of dedicating any time to studying this subject is unlikely.
In this case, you can then go to the second option: hiring professional help.
Thus, the person who wants to create his Emergency Reserve can then hire a financial consultant (who will guide, for example, which is the best fund for the reserve) or even use a brokerage specializing in investments.
2. Put your money to good use
When it comes to saving and making money, it is inevitable that we think of the traditional “savings account”.
Yes, this is a way to make money, however, it is one of the least profitable applications.
Professionals in the financial segment advise that a solid Emergency Reserve is one with a value equivalent to between 6 and 12 months of a person's monthly expenses.
We know that it is not easy to accumulate, which is why it is so important that the money yields as much as possible.
Some forms of investment, in addition to savings, can be found today;
Such as: Treasury Selic, CDB with daily liquidity, Fixed Income Funds, LCI and LCA with daily liquidity or DI Funds.
3. Don't unnecessarily spend the Emergency Reserve
We already understand here how it is necessary to create an Emergency Reserve, so this third step may be the most difficult to perform for most people.
Understanding “when” to use this money will make all the difference in achieving your personal economy.
A burnt out shower, a faulty car engine or even something you need at the moment.
Everything must be analyzed carefully, as there is a huge tendency on the part of human beings to not know how to differentiate the important from the urgent.
The concept of “emergency” applies to unforeseen events that lead to extreme situations, where no other option to obtain the value is possible.
And, if that's the case, having an Emergency Reserve will definitely be one of the best things ever done.
