10% for the Unexpected

Have you experienced before a sudden family emergency? Maybe an accident or other cases? I hope not, but life is not expectable sometimes. That’s why we have to be prepared for it financially or mentally.

Thus, I suggest that you save

10% for the Unexpected.


Is 10% enough? I hope it is. 10% every month would amount to quite an amount in a year. But if emergencies do happen and you need more money, there are always other accounts that you saved up. That’s why you need to save money and not spend it all.

Where to save? Saving money at the right place is very important in this world where inflation keeps eating away our money. I suggest that you save 50% of your money there, and the other 50% in a low risk financial tool example Fix Deposit or a Bond Fund.

Why not all in bank? Because money saved in banks are given too less interest to normal practice is below 1%. With an inflation rate of about 5-6%, your money in bank is getting less every year. Fix deposit will help in the fight with inflation by providing 3-4%, while Bond Funds provides a constant 8-10% every year.

Why not all in FD or Bond Fund? Liquidity would be the problem. Savings in bank could be taken out thru ATMs before midnight. FD could be taken out only in office hours. While Bond fund needs 5 working days before you get the money. Thus, it is better to save separately to avoid financial problems when emergency arise.

How about insurance? Personal Accident insurance only cover you accidents , Medical is also the same. Some medical does cover the whole family, but normally doesn’t include your parents. So, I suggest you do buy a PA and a Medical but still you need to save some up because emergencies could not be expected.

I hope you won’t need to use the money but still you must save

10% for the Unexpected.


By,
Yong Yeong Chow
MSN: yyc83@hotmail.com
* Catch me on MSN if you need FREE financial advice.