As the name indicates, an emergency fund is an investment or bank account that provides funds in the event of an emergency, such as car repairs, temporary unemployment, medical expenses not covered by medical aid, etc.
During COVID many people realised just how crucial an emergency fund can be.
It is recommended that you have between 3 and 6 months’ net income in the fund. In other words, if your net (after tax) income is R20 000 per month, you should have between R60 000 and R120 000 in an emergency fund.
Most people build their emergency funds by way of a monthly contribution until they have reached the required amount.
There are various savings / investment vehicles available, but the main requirement is that the funds should be liquid (immediately accessible).
Speak to us if you would like to know more.