Emergency Fund in Singapore | Why Do You Need an Emergency Fund?

Budgeting | Lifestyle | Singapore

Importance of Emergency Fund in Singapore

An emergency fund is a sum of money set aside to cover sudden events. For instance, accidents, sudden injury, or a loss of income. It’s essentially what you save “for a rainy day.” Unpredictable events can be both life-changing and costly, resulting in financial emergencies. An emergency fund provides the cushion you need to pay out-of-pocket expenses. This prevents you from having to rely on loans or credit cards to cover a short-term cash shortage. In this blog, we discuss emergency fund in Singapore and why do you need one.

You may be thinking at this point, “Isn’t that what insurance is for?” To have insurance for financial emergencies is great! It is a safe way to cover the majority of your medical expenses. Even if you have insurance, you may find that such unexpected events result in a loss of income or necessitate additional living expenses (e.g. a helper). Every Singaporean’s financial priority should be an emergency fund, which should come before saving or investing for retirement.

How Much Money Do You Need to Put Aside For Emergency Fund in Singapore?

If you do not work, an emergency fund should be able to keep you going for 6 months or so. If you are a first-time employee, you can aim to save three months’ worth of expenses, as a first step. We recommend saving up to 12 months of living expenses for self-employed individuals with variable income. As it is difficult to predict what your monthly income will be during emergencies.

Why Do You Need Emergency Fund in Singapore?

When you’re dealing with emergencies, YOLO isn’t so much fun!

An Accident that can Cause Medical Emergencies

For example, if you get caught car accident, you will almost certainly have to pay for car repairs. If you have a medical emergency and a financial emergency at the same time, you will have to pay out of pocket before your insurance claims are processed.

Loos of Employment

Being laid off or fired stinks. If you’re lucky, you’ll be able to find the perfect job within a month. For many, it may take at least 2-3 months to find meaningful work again. This could take even longer. Unfortunately, a lack of income does not prevent the bills from piling up. This is when your emergency fund comes in handy.

Household Maintenance Expenses

Most Singaporean homes are built to last, but there are many unforeseen events that may necessitate household maintenance. Water pipe bursts, electrical fires, a faulty air-conditioning system… It’s amusing until it happens to you. These items may end up costing you more than you anticipated. We can only say, “Never say never.”

 Veterinary Surgery

When those furballs have ingratiated themselves into your lives, the last thing you want to do is put them down simply because you can’t afford a pet. However, even with the best-laid plans of mice and men, there may be pet medical emergencies that you were not expecting. Surgery on an animal can cost between $250 and $2500, depending on the severity of the problem and how long the vet needs to work on it.

If your pet develops a serious illness, such as cancer or heart disease, medical bills could range from $1,500 to $20,000. All of these expenses must be paid in advance, and there are few options for pet insurance. This is where having an emergency fund comes in handy.


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