An emergency fund is money set aside for life's surprises — a job loss, a medical bill, a broken aircon at the worst time. Having one means you don't need to raid your investments or reach for a credit card when things go wrong. Here's how much to keep, and where. 👇
📏 How much should you keep?
The rule of thumb is 3 to 6 months of essential expenses. Lean towards 6 months (or more) if your income is less stable — freelancers, commission earners, a single income supporting a family. You can lean towards 3 if your job is very secure and your insurance is solid.
Important: base it on your essential expenses — rent or mortgage, food, bills, transport, insurance — not your full lifestyle. Work out your number with the emergency fund calculator.
🏦 Where should you keep it?
Somewhere safe and easy to reach— the whole point is that it's there in a hurry. A high-yield savings account works well, as do Singapore Savings Bonds(you can redeem any month with no penalty). Don't keep it in shares — they could be down exactly when you need the cash.
🪜 How to build it
- Start small — even a few hundred dollars beats nothing.
- Automate a monthly transfer the day after payday, so you don't have to think about it.
- Top it up with windfalls — your bonus, a tax refund, ang bao money.
🧮 Set your target
Use the emergency fund calculator to set a target, then a savings goal to reach it month by month.