3 months…

Saving for a rainy day…

I REMEMBER WHEN OUR FRIDGE – of many years – CALLED IT QUITS ON US… ‘She’ had been complaining for a while and we tried to get many ‘fundis’ to fix it but to no avail. It was when the meats, the beans, the veggies begun to thaw that we knew we were in serious trouble. The provisions were two last us another two weeks but being the middle of the month, it caught us flat broke! There were two options, use traditional methods of preservation (make water fridges and smoke whatever could be smoked) or two, get another fridge immediately.

Thankfully, I had a credit card and rushed to the nearest retail outlet. I recognized, though, that my card had a limit and should another emergency situation come up, there was no possibility of managing. I was also now well aware that a credit card is not something you flaunt for your peers to recognize your status but it had the evil possibility of channeling huge penalties and ugly interests my way. I paid it off in the immediate weeks following the acquisition with saving for a rainy day making divine sense!

Over the years I have tried to build an emergency fund, but as my previous post allude, it’s a huge struggle. Still I try and have achieved considerable wins through saving in places where frequent access to cash is restricted. The challenge has been finding ‘accounts‘ that deliver decent returns. In addition, figuring how much of my monthly pay to save has been a challenge.

Experts say that you need savings equivalent to three months worth of monthly expenses. This implies that you need to have an almost accurate picture of how much you spend in a year so that you can work it back to three months. A year? Yes because this helps you see the irregular or adhoc expenses that do not necessarily happen in a ‘regular’ month. It also means that you have to consistently save towards the fund. 3 months may seem insurmountable but the great thing about personal finance is that you get to set your own timelines. If you feel this goal can be achieved in 3 years, then commit to consistently saving amount X. This way you’ll be paying yourself first before you disburse the rest of your earnings. Don’t be discouraged by the fact that what you can keep aside doesn’t even represent 5% of the monthly target, just do it consistently. And by month 3 of consistency, your statrment will reflect an increase that will give you the impetus to do better, faster 👛


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