Why Having An Emergency Fund Is A Must For Every Pinoy


When things get uncertain, most of us pinoys tend to leave everything to fate. And you know what the worst part is? 9 out of 10 filipinos do not have any emergency fund in place! That’s like going to war blind folded, without weapons, clinging only to your 5 senses and not much else. You can probably imagine what happens next right?

Let me first be clear that an emergency fund is totally different from the usual “savings” that we all do. When I say emergency, I’m talking about a life and death situation, not a wardrobe malfunction on your way to a friend’s birthday party.

I’m talking about those unpredictable, life- altering events that require immediate financial attention. And having an emergency fund on the side can help you get through that sticky situation. These include, but are not limited to:

  • Car Accidents
  • Retrenchment
  • Work- related injuries
  • Medical expenses
  • Home/ Automobile repair

Building up an emergency fund gives you the financial “buffer” you need to pay any out-of-pocket expenses at a moment’s notice – meaning you don’t have to rely on loans or credit cards to cover the unexpected costs.

If you have insurance to cover any of the financial emergencies above – great! Insurance is a great way to cover the bulk of the expenses. But even with insurance, there’s the possibility you’ll have to pay additional amounts that your policy does not cover.

Having an emergency fund should be a major financial priority for every Pinoy – and should come before savings or investing for retirement.

Jumpstart Your Emergency Fund Now!

The lucky number here would be 6 months of your total monthly expenses. This means everything from your monthly utilities to credit card repayments.  So if your monthly expenses tally to ₱5,000, you should have ₱30,000 in your emergency fund.

If you’re earning a fixed income, you should consider yourself lucky – because it’s easier for you to gauge how much you can save every month after doing a cash flow analysis. Of course, all this should be put in writing to help you keep track.

For Variable Income Earners…

Your lucky number should be higher than that of a fixed earner since your income changes from month to month.

If you’re an agent, salesman, or a self- employed individual, your emergency fund should cover 7 to 8 months of your total expenses. Again, let’s say your monthly expenses are at ₱5,000, you should have ₱35,000 to ₱40,000 in your emergency fund.


How Can You Build Your Emergency Fund?

Yes, building up your emergency fund might not be the easiest feat to accomplish. How fast you manage build it really depends on your salary, liabilities and your debt obligations (especially credit card debt).

If your liabilities take up most of your income and you’re only saving ₱500 a month, it’ll take 30 months to reach ₱15,000.

But if you can free up some income by cutting back on some expenses (dining out, movies, etc.) and generating additional revenue streams (freelancing, tutoring, etc.), you can cut down that 30 month waiting time.

If you’re having trouble saving up or feel discouraged by the amount you must save up, consider this popular approach to building up your emergency fund – start small. Start out by saving at the very least, ₱1,000 in a savings account and work your way up to another ₱1,000. Then, keep on repeating this process until you reach your goal.

After all, it’s easier to reach smaller “milestones” on your journey to building an emergency fund than trying to “scale a mountain” at one go right?


Are you having problems saving for an emergency fund? Share your thoughts with us on the comment section below. 

Michael Mutia

Former tv writer and radio DJ, now the resident ball of sunshine for MoneySmart. I like things cute and fun. When idle, I turn to Christina and Mariah for some music therapy. I write about interesting money-related articles too for our blog. So if you got any good story ideas to share, or know where to find cheap stuff, send me a shoutout at [email protected]

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2 thoughts on “Why Having An Emergency Fund Is A Must For Every Pinoy

  1. One of my first investment is to have food storage at home because if there are calamities, you lost your job, emergencies, war, you don’t have to worry because you are panic proof and knows that you can feed your family. See what happens of the past.

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