Emergency Funds for Disasters

Written by imoney

A disaster is a phenomenon that can cause damage to life and property and destroy the economic, social and cultural life of people (Source: Wikipedia).  Truthfully, a disaster can capture you off-guard and will just left you in the worst case possible.  And when I mean worst is that you barely can do anything about it.

Remember when Typhoon ‘Ondoy’ struck the Philippines back in 2009? A lot evacuated their property, had possessions ruined by the floods and lost family members. I remembered when I was back in Manila; I had some colleagues who applied for a salary loan for renovations or to buy appliances and furniture that got destroyed in the flood. It was thoughtful for the company to do that with no interest involved but I find it ridiculous to buy or pay for these things out of a loan. Don’t get me wrong, these renovations are needed but I did not need to have them through a loan. I don’t want to be in debt. I was fortunate enough to have a company that can lend me without any interest but this does not apply for everyone.

An Emergency Fund, just in case a disaster happens, if someone loses his or her job or if a calamity occurs, there is the fund that they can rely to. No matter of a hardcore planner you are, there are some things that you can’t really prepare for. Here are some examples of an emergency, let’s see if you can identity which is which:

Loss of a permanent job

Your son’s field trip

Hospital fees

School book fees

A vacation

Insurance cost

Renovation costs

Answers: Y,N,Y,N,N,N,Y

An emergency is a situation that poses an immediate risk to health, life, property or environment. People often neglect planning for costs that happens infrequently but foreseeable. Examples include payment of insurances and hospital fees that when they do happen, oftentimes we have not planned them or included it our budget. It should be made clear that an emergency fund is fund for your day to day activities caused by an unforeseen event.