I have posted a post called Budget to Financial Freedom - Prepare for the known, the unknown and your dreams and Budget to Financial Freedom - Reserve Account” . In this part I will discuss further about the reserve account in budget.

Emergency account is an account that set for the unknown expenses in our budget. In our life, it is hard for us to predict the future. It really a headache if we need money for emergency cases while we don’t have. The best way to have some peace of mind when these events occur is to know you have funds set aside for emergency usage.

So how much we should put in emergency account? In this case, I can’t give you the amount because it is different for different people. Anyway the basic for emergency account is you must keep at least 3-6 months worth of take home pay for it. This will ensure you can continue your life at least 3-6 months when any problems occur.

So determine certain amount of your income that you can put into emergency account and build up the account slowly. Sometimes it is hard for us to save 3-6 months of income but we can build it up slowly. If you take action, slowly you can make it!

PS : Remember this money is not confused with reserved account as it is being saved for expenses that already occur or will occur in future.

Here is the link to Part 1 and Part 2 of this series.

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