Thread on emergency funds: Most of us know what an emergency fund is - it's a fund (usually savings in a separate bank account) which pays for financial emergencies (unemployment, car repairs, medical costs, a leaking roof etc)

Emergency funds are when Murphy comes to visit.

1. In our story, we were privileged to have received a great retrenchment package which basically covered 14 - 18 months of our living expenses.

Imagine what would've happened to us if we didn't receive this...

2. To put it into context, our emergency fund would have been depleted after just FOUR months.

My wife was unemployed for 9 months. Perhaps we would've needed to take out a personal loan, move out of flat to reduce our rent, and have a diet of beans on toast.

3. There's lots of debate among financial coaches and planners about how large your emergency fund should be. General recommendation is between 3 - 6 months of living expenses.

Obviously it's a personal decision, but after going through a period of unemployment...

4. We have changed our viewpoint of the size of an emergency fund to be between 6 - 12 months of living expenses.

Some would say this is too conservative, but if you live and work in South Africa and with our current pandemonium of a pandemic, 6 -12 months is my suggestion.

5. General tips on emergency funds:
1. Build it as fast as reasonably possible.
2. Put it separate from your day-to-day bank account.
3. Relative quick access (financial emergencies are often urgent)
4. Consumer debt free (this will help you with point no 1)

6. My personal mistakes:
1. My own budgeting/management could've been much better, making the funds last longer.
2. Less attention to own finances due to the "very large emergency fund"

7. Emergency funds are not sexy. But they're the goalkeeper of your finances. Without it, you'll lose all your games and be relegated yesterday.

A good goalkeeper can prevent losing and make winning easier.

8. Set up your financial house like a good football team - a strong spine:

1. Striker - A good income/Income streams for goals
2. Centre mid - A balanced budget that gives you options
3. Centre def - Low/No consumer debt
4. Goalkeeper - Emergency fund

9. Having a strong spine can win you the EPL. Remember that you are the manager of your financial squad and poor management can give you a Champions League spot, or be a relegation contestant.

10. Nothing I've said here is "new information", but I hope you've enjoyed the thread. Please feel free to comment your suggestions or feedback.