Emergency Funds; Are you prepared for the worst?

We have all being there. A situation arises where we have to come up with some money to sort out a given problem. Be it a hospital bill you need to settle, car got a puncture and need replacement or you got fired and don't know how you will pay the bills. You think of how to raise the money fast and quickly find yourself downloading Branch, Okash etc to borrow some money. What if there was a better way to handle such situations? To have a go to source when things get back. Here comes Emergency Fund. What is an emergency fund? Investopedia defines it as money stashed away that people can use in times of financial distress. Having an adequate emergency fund saves you the headache and hussle of paying bills at such times. So how do you go about creating one?

Save

Set aside a given amount of money every month to fuel the Emergency fund. This can be 10 -30% of your income but it shouldn't be less than 10%. Depending on the nature of emergencies, you can estimate a given range where you should be safe if such a scenario occurs in future. Once you reach this amount, you can save for something else and be at ease knowing you have a backup in case things get worse.

Money Market Fund

So know you're setting aside money for the fund but where do you keep it? I value liquidity above everything else and like to easily deposit and withdraw my money fast. This led to me to Money Market Funds which are a great place to store your emergency fund. They provide high liquidity where you can easily access the money when you need. It is better than a bank as it earns more interest. The best is Cytonn in terms of interest which yields 10 - 11% per annum. What I like about Cytonn is that it compounds daily. So the money that was there yesterday is different than the money that will be there tomorrow. Moreover, their app is amazing in terms of user experience. I am sure I am not the only one but some of the apps or website of most of the Money Market Funds have are terrible. You find the application was last updated 2017  and the user experience is terrible. A company with a terrible application will also be terrible with your money. 

CIC insurance also have a great Money Market Fund. They have been in the MMF business longer than Cytonn and are very stable. They updated their app recently and it is fantastic. However, when it comes to withdrawing funds, it takes around 2 days unlike Cytonn which takes only a few minutes.

Thanks for reading all the way to the end. I hope you find this article informative. If you have any suggestions or comments, please let me know in the comment section.