Budgeting

5 Situations Where You Wished You Had an Emergency Fund

emergency fund

Peter Lin

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Unless you want to see your life flash before your eyes, you wouldn’t jump out of an airplane 12500 feet in the air without a parachute. So why are so many Singaporeans still doing the same thing with their money and not maintaining an emergency fund? Make creating an emergency fund one of your resolutions for 2015, and set at least six months of your salary aside. Why? Here are five situations that could happen to anyone in 2015, where you’ll wish you had that emergency fund.

1. Loss of Job

Being laid off or getting fired sucks. First, you’re probably going to end up spending the first few weeks grieving the loss and wondering if you could’ve done things differently. Just remember to do these 6 things everyone should know when you lose your job.

Then, you have to go through the process of job interviews all over again. Have fun trying to explain why you got fired to your potential employers.

 

emergency fund loss of job

“I honestly thought regular ceiling inspections were part of my job scope.”

 

If you’re lucky, and you’ve made the right connections, you’ll find the right job within a month. That’s assuming you’ve been smart and started sending out feelers to other companies with the intention to move. All that being said, the “right job” is probably going to be easier to find if you lower your expectations. Not every office environment is going to feel like working in Google or Yahoo.

For the rest of us, we’ll take at least 2-3 months to get substantial work again. Unfortunately, a lack of income doesn’t stop the bills from coming. This is when that emergency fund comes into play.

How much do you need when you’ve lost your job? At least 3 months salary.

 

2. Unforeseen household maintenance issues

Most homes in Singapore are built to last, but there are many freak events that might lead to unforeseen household maintenance. We’re talking about major incidents like burst water pipes or electrical fires. But even a minor situation like replacing your entire air conditioning system when it breaks down might end up costing more than you expected.

 

emergency fund air con maintenance

What a 20-year-old Singaporean without air con for a week looks like. True story.

 

If your air conditioner stopped working in Singapore’s “cooler” months like what we’re having now, you’d probably be grateful for the opportunity to reduce your utilities bill. But you know things tend to break down when you need it most. In fact, when the temperature goes about 32 degrees (which is just about most days, really) you’ll be willing to shell out any amount just to have the comfort of an air conditioner once again.

Depending on how many units you have to replace, you could be looking at spending about $1000 per unit. Your emergency fund will need to be tapped into.

How much does replacing an entire air conditioning unit cost? Between $2000 to $4000.

 

3. Shotgun Wedding

Your relationship is all fun and games until a baby shows up. And unless a star rose in the East and Christians are preparing for the Second Coming, it’s probably not a virgin birth. In most social circles in Singapore, that means it’s time to start planning a wedding.

Of course, you could be a real cheapskate and NOT have a full-blown wedding. A small ceremony at the ROM, with only your families in attendance won’t cost you more than a few hundred dollars. But honestly, is reminding your in-laws you’re broke really the best way to start this new chapter of life?

 

emergency fund shotgun wedding

“Ask me again to pay for your wedding. I dare you.”

 

So you and your future spouse need to start planning for a wedding, and you probably don’t have the luxury of time. That means that you’re probably going to have to pay a premium to book venues with less than six months’ notice. Even with these 5 DIY tips for an affordable wedding you’re probably still going to have to tap into your emergency fund.

That being said, as long as you avoid the 3 biggest money traps of wedding planning, there’s no reason why this can’t be the wedding of your dreams. Because honestly, being single is still more expensive than being married.

How much does a shotgun wedding cost? $30,000.

 

4. Pet Surgery

For most pet lovers, when those furballs have ingratiated themselves into your lives (or, in the case of cats, you’ve ingratiated yourself into theirs!) the last thing you want to do is to put them down just because you’ve decided you can’t afford a pet. But the truth is, even with the best laid plans of mice and men, there are pet medical emergencies that you may not have anticipated. And these will cost money.

 

emergency fund pet surgery

“I’m sorry, but derpface is not covered by your pet’s insurance.”

 

Surgery on an animal can cost anywhere between $250 and $2500, depending on the severity of the problem and how long it’ll take the vet. If your pet gets a serious illness like cancer or heart disease, medical fees could range anywhere between $1500 and $20000. All of these costs need to be paid upfront, and there are limited pet insurance options available. That’s when having an emergency fund comes into play.

How much does keeping your pet healthy cost? Between $250 and $20000.

 

5. Investment opportunities

Not every use of your emergency fund needs to be a sign of the apocalypse. There are many good investment opportunities that can arise which will make you glad you have cash on hand. For example, if you believe your friend is the next Bill Gates or Mark Zuckerberg, tapping into your emergency fund to help him grow his startup might be the best investment decision you’ve ever made.

 

emergency fund investment opportunities

“At the count of three… when I snap my fingers… you will want to give me all your money.”

 

Or it could be something as simple as just being at the right place, at the right time. Government auctions, for example, tend to attract lots of attention and the bidding can get fast and furious. You can get anything from Rolex and Panerai watches, to Hermés bags and even BMWs that have been impounded or seized. Having an emergency fund that you can use at short notice makes getting some of these bargains easier.

How much should you invest in a good investment opportunity? That’s up to you, just don’t forget to top up your emergency fund after that!

Can you think of any other situations where an emergency fund would be helpful? Share them with us.

Image credits: star5112, alex yosifov, David Hodgson, Tom Pollard, John Vance

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • Rokawa Hakim

    I rather look broke but remain financially healthy than become broke to look financially successful to the in laws.