Corona Situations Remind Us How Urgent “Emergency Fund” Is and To Manage Our Financial Better

Hi Guys! Am finally back after years of absence from blogging world. Erased my previous blog and decided to start fresh on Medium.

Like everybody knows most part of the world is now in chaotic situation due to Corona spread. Not only impacting health services and sectors, but also various other aspects including economy and labor. It’s just hard to imagine how yesterday things were normal for a lot of people but within around couple months everything turned upside down. Heart breaking to hear tons of stories about companies declare bankruptcy, layoffs, or companies that can’t pay their employees salary.

Am grateful that I still have my job, enough sustenance and a lot of things to be thankful for to God. Despite of that, the Corona situations outside there send me strong message on how we should really prepare for anything (financially) and I mean it anything. Yesterday Glory can transform to Today’s Nightmare. And you can imagine if you never get ready for it.

I used to work in a bank up to around 3 years ago and I learned a lot of things about Personal financial planning there. Invest around in various instruments were quite a trend (duh, of course, you’re working in a bank dude). But after I resigned and move to my next employer back then, I lost my discipline. I could say that I never invest as much as I did. 1,5 years later I realized how much of a spender I was. Damn. So at the early 2019 I re-evaluate my financial situation. Yes, I know that I always had enough, to give you context, I am still single, my parents have several assets mostly in properties, and have 2 sisters who are working as well, so I never felt much pressure to save money. But back then there were several situations that made me try to change back to my previous self. I’d like to share several things that I can from my journey in how to manage my finance better, and the journey is still on going and getting stronger due to Corona situations.

Insurance & Protection

This is something that I learned through financial planning workshop years ago. Ensure you and your family have proper protections should something happen. You could enroll in proper insurance program (Life Insurance, Critical Illness, etc). I recall the trainer encouraged people who already had spouses to stop saying “I love you till the end of my life” cause after deaths they will leave their spouses with a lot of complexity (financially). Start to prepare for everything, every tiny worst cases that might happened and say “I love you forever. Even when I’m no longer alive”. So I enrolled to proper Life insurance program that can at least give coverage just in case something happen to me with the amount that minimum can cover my credit cards bill or any obligations that I have and can give them a fund to hang on for some time after losing one family member who become source of income. There are a lot of insurance program providers so pick carefully and this might sounds boring but READ all the terms and conditions, the coverage scope. Share the insurance sheet with your families and register at least 2 heirs (could be siblings, parents, spouses). Several insurance programs not require you to register the names, they might have specific policy which arrange that registered family member can conduct insurance claim.

Emergency Fund

Here it is. There are a lot of recommendations of the amount of emergency fund that somebody must have. Several say that if you’re still single be prepare with at least sufficient fund to cover 3 month expenses, 6 month expenses or even 12 month expenses. Different calculations will be applied for married people. I myself will suggest several below points :

• If you’re still single, go with preparing minimum 3 month expenses. I picked this number due to average hiring speed of people in the field where I work is around 1–2 months after submitted applications. Hence, if I encountered layoffs I can still survive during that period before I get a new job. Let me remind you something, different industry will have different hiring speed and needs, so it might apply differently if you’re working in different sectors/fields. If you’re part of talent groups who are currently rare in the markets it might be even faster than 1–2 months.
• Remember that emergency fund must be easy to be liquidated. Don’t put your emergency fund in the same bucket with your investment, time deposits (which locked your money) or other budget. Make a specific saving account for this needs.

Okay, now we can go into the next step. But before we talk about investing our money, the preliminary key to handle your finance well is Recognize Yourself First then Pick the Methods. What kind of person you are? How you usually use your money? What bad habit in handling your money that you’d like to eliminate? What is your investment appetite? Are you a risk taker or no? What is your short term, medium term and long term goals?

Am giving you one example, if you read personal finance articles/writings there are several recommendations in how you can manage money in your accounts. Whether it’s the best to have all in 1 account, or spread them into multiple buckets, and so on. In my journey, there are no right or wrong answer. Once, I read an article that strongly not suggesting you have multiple bank accounts (of course they have their reasoning and I agree with several of the statements) but that’s not the best way for me. I need to really separate my bucket accounts into several banks and I do have quite lots of bank accounts (not only in terms of manage my budget, I have this urged to keep trying various banking products and investment platforms so yes I enrolled lots of them). Somehow when I put my money into several specific budget accounts, it’s easier for me to build discipline not to use different bucket for different needs. At the opposite, I have a friend who is very cool cause she only had 1 main bank account (the same with her payroll) and able to manage herself very well not to go everywhere directly go shopping after payday and put her regular saving on the same account. So, build the method in handling your money based on what suitable for you.

Invest, Invest, Invest! and Diverse, Diverse, Diverse!

Investing your money is a long journey and am sure it will not be enough to tell the story through this one only post. Overall, after you find the answer about yourself, your goals, and how is your investment appetite (whether you are ready to loss big to win big, or if you are part of other type of risk profile). You can start to observe what kind of investment products that suitable with your risk profile. Several tips :

• Read a lot, and don’t just rely in 1 source. I met a lot of people who loss a lot on their investment journey due to they made investment decision based on “My friend said this is a good investment, so I’ll invest as well”
• Observe the platforms or the channels that you used to put your investment, make sure the companies are credible and have proper license. I can share several platforms that I use, coming soon on my next writing!
• If you are lazy to monitor your investment portfolio, and not the type who are willing to run through various data then perform the purchase, there are several platforms which offer auto debit programs. This is useful as well if you would like to enforce yourself to spare part of your salary to be invested
• Remember your investment goals prior making investment decision. Not all investment are good for short term/medium/long term plans
• Am sure you heard a lot about not to put all your eggs in the same basket and that is true

Okay guys for the Invest part I know it still quite general but I’ll write more details on my next writings cause 1 post will not enough. See you on my next post!