Importance of Emergency Fund During a Pandemic (COVID-19)

Money Management

Last Updated on by Raymund Camat

In this blog post, I discussed the importance of having an emergency fund. In this post, I want to emphasize again the importance of having an emergency fund as we all struggle to survive the current pandemic caused by covid-19 virus, a novel (new) corona virus which killed at least 5,000 people and infected more than 200,000 people worldwide.

In the Philippines, community quarantine is implemented in various towns, cities and provinces in the Philippines. Public transportation is limited. Many establishments are closed. Many workers are forced to work at home. Many people are forced not to work but without pay. Many Filipinos are experiencing the tremendous economic impact of this pandemic.

Many of our fellow Filipinos are earning day by day or paycheck to paycheck. They don’t have savings. A day without any income means a day without food in the table. Imagine 30 days without work and without pay. Who will pay the rent? The utilities? The mortgage payments? The credit card bills? For millions of Filipinos, the major concern is where to get the money to buy food and personal hygiene supplies to fight the virus.

There is even a joke from social media that says many Filipinos will not die from the virus but from starvation.

There are concerns that this pandemic will make many people bankrupt and unemployed. I have no doubts with these concerns. However, for the greater good we need to fight the virus by cooperating with the government in this massive community quarantine being implemented.

The government promised financial aids to affected Filipinos but from our own experience as a people, the government is slow in providing these aids.

It would be easier for many Filipinos to survive the economic/financial impact of this pandemic if everyone understand the importance of having an emergency fund. Unfortunately, the habit of saving money for emergencies is not practiced by many of our kababayans.

Emergency Fund

According to Investopedia: An emergency fund is a readily available source of assets to help one navigate financial dilemmas such as the loss of a job, a debilitating illness, or a major repair to your home or car. (Source: Investopedia)

Financial advisors recommend that emergency funds should typically have three to six months’ worth of expenses in the form of cash or highly liquid assets (example: money market, bank deposit, etc).

Personally, I even recommend to build an emergency fund good for one year expenses if you can. This will give you a tremendous peace of mind that whatever happens, you have the financial capacity to survive any crisis in your life. My personal goal is to have at least one year worth of expenses as my emergency fund. If feel uncomfortable if my emergency fund decreases below 6 months worth of expenses.

During a pandemic, like the covid-19 pandemic, you will use your emergency fund to buy food and personal hygiene supplies. You will also use the money to pay rent, utilities, mortgages and other expenses. You will never know how long a pandemic lasts so better be prepared with enough cash.

Having an emergency fund will also help you financially when you lose your job. It is difficult to find a job nowadays especially in the Philippines. If you or a family member get confined in the hospital, you will be needing money. Sometimes health insurance may not be enough to pay the hospital bills. Critical illnesses, for example, will max out your health insurance. Philhealth has limited coverage.

Remember, your family, friends and relatives are not your emergency funds. Hindi mo emergency fund ang pamilya, kamag-anak or mga kaibigan mo. Each of us should learn how to save for the “rainy days”.

Many of us have the capacity to build an emergency fund but sometimes we tend to spend every peso we have without thinking for the future. Sabi nga ng iba marami sa atin ang one day millionnaire. Yung tipong kapag gumastos parang wala ng bukas. We tend to buy new phones even our current phones are still functional. We tend to buy new clothes even our closets are full of clothes we barely use. We tend to travel because of peer pressure and jealousy. We tend to buy things we don’t need.

How about before your splurge your money buying unnecessary things, you first create a saving plan that will help you build your 3-6 months emergency fund. At the very least, have an emergency fund. Every responsible adult should have an emergency fund.

How To Build Your Emergency Fund

Create a Budget

Create a monthly budget so you will understand where your money go. If you don’t have a budget, you may end up spending more than what you earn forcing you to borrow money (ex. personal loans, credit cards). You need to stick on this budget to prevent any over and unnecessary spending.

You may adjust your budget so that you can allocate money for your emergency fund. You may need to forego some of your expenses such as premium coffee or online paid streaming service. You may also cook some of your meals instead of buying fast food or eating out.

Start with a Lower Initial Amount

Starting your emergency fund should not be particularly painful. Begin saving a manageable amount every month until you achieve your emergency fund goal. You may start with 500 pesos a month which you may increase over time. Put this money in a separate bank account so that it will not mix up with your money intended for your monthly expenses.

Avoid putting your emergency fund in stocks and other volatile financial instruments. If the current value of your shares is lower than the amount you used to buy them, you will lose money if you sell them right away. During emergencies, you may be forced to sell your shares at a loss.

Avoid the Temptation To Spend It

There would be times that you will be tempted to spend your emergency fund in non-emergency purposes. You may be tempted to spend it during mall and ticket sales or spend it to buy new gadgets. You should have the discipline not to touch your emergency fund. Again stick to the original use of your emergency savings. Having an emergency fund will provide awesome peace of mind.

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Raymund F. Camat, CIS, REB, CWP®, CEPP® is a SEC-Certified Investment Solicitor (CIS), Certified Wealth Planner and Certified Estate Planner, Phils. He is also a licensed insurance and mutual fund advisor for Sun Life Financial. He wants to educate the Filipino public on the importance of financial planning, investment planning, wealth planning and estate planning. He offers Personal and Family Wealth Planning to Filipinos from different generations. He has a bachelor's degree from the University of the Philippines. You can reach him at 09179698062 (Globe/TM/ABS-CBN/Viber), 09392787408 (Smart/TalkNText/Sun Cellular), (02) 508-9025 (Landline) or email him at For OFWs, he also conduct online video consultation through Skype, Viber or FB Video Call. ________________________________________ DISCLAIMER: This website reflects only the views and opinions of Raymund F. Camat and is not part of any official communication tools of any life insurance and investment company. The views and opinions on this website do not necessarily reflect those of the company, the management, the advisors/agents and the employees of any life insurance or investment company.
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