In my previous blogs, I discussed the importance of having an emergency fund and shared some simple tips to build one.
Second Step: 5 Simple Ways to Prepare Your Emergency Fund
In my previous blog, I shared why having an emergency fund is so important and gave a few practical tips on how to start one. Now, let’s dive deeper into the process with five simple steps to help you build yours.
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Set your emergency fund goal.
Decide how much you want to save—whether it’s three months’ worth of expenses, six months, or more. Having a target makes it easier to stay motivated. -
Make a budget.
Track your income and expenses so you can identify where to cut back and allocate funds for savings. -
Open a separate account.
Keep your emergency fund in its own account to avoid mixing it with your daily spending money. -
Record every cash-in and cash-out.
Monitoring your progress will keep you accountable and help you see how far you’ve come. -
Stick to your plan!
Discipline is key. Small, consistent steps will eventually build your fund.
Sharing is Caring: How I Achieved My ₱60K Emergency Fund in Just 3 Months
Saving ₱60,000 in three months wasn’t easy, but it was possible because I followed a few guiding principles:
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Make it your first priority. Treat your emergency fund like a bill you must pay.
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Be strong enough to protect it. Only touch it for real emergencies—nothing else.
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Learn to say NO. Just because you have extra cash doesn’t mean you should lend or spend it impulsively.
Once I reached my emergency fund goal, I asked myself: What’s next? It took me months to decide, but I remembered a seminar I attended in college about achieving financial freedom. One line from a speaker has guided me ever since:
“Don’t work for money, let money work for you.”
At first, I didn’t understand it. I turned to financial videos on YouTube, learning from the experiences of millionaires like Warren Buffet, Bill Gates, Jack Ma, Robert Kiyosaki, and others.
I realized that to maximize the growth of our money, we can’t leave it in places where it won’t grow—low-interest bank accounts, piggy banks, or wallets. True growth requires placing your money where it can earn interest while you continue working.
Time, patience, and consistency are the keys. Most investment companies today require a minimum 10-year maturity period.
As George Choy says:
“Every pound is a seedling. Invest your seedlings to create a tree. Re-invest your seedlings to grow a forest.”
— George Choy, Stealth Millionaire
Choosing Where to Keep Your Savings: 3 Options
Now, if you’re currently on the quest of deciding where to keep your savings, here are three options you can consider. These suggestions are based on the steps I personally took after completing my emergency fund goal.
I’m sharing them with you so that you can easily choose the option that best fits your lifestyle, financial goals, and risk comfort.
1. Insurance
Looking back, I can say that one of the best decisions I made after landing my first job was getting insurance. It wasn’t something I jumped into right away—it actually took me one year and seven months to secure it, because I focused on building my emergency fund first.
A lot of people may already know what insurance is, but I’ve also met many who are still unsure. So, let me break it down.
By definition, insurance is a legal contract between two parties: the insurance company (insurer) and the individual (insured). The insurer promises to compensate for financial losses due to covered contingencies in exchange for the premiums you pay.
In simpler terms, insurance is a risk transfer mechanism. Instead of carrying all the financial risk yourself, you transfer it to the insurance company. In return, they provide you coverage in case of unforeseen events—things that could otherwise put a heavy strain on your savings.
What is insurance?
Insurance is a legal contract between an individual (the insured) and an insurance company (the insurer). In exchange for premiums, the insurer compensates for financial losses from unforeseen events.
Simply put, it’s a risk transfer mechanism—you shift the financial risk to the insurance company while gaining coverage.
Why it matters
Financial advisors often stress the importance of insurance. It protects you, your family, and your financial future. Knowledge is power—understand it before committing.
Steps to Getting Insurance
- Step 1: Attend a seminar about what insurance is.
- Step 2: Have a counseling session with a financial advisor to identify your priorities (health, security, retirement, etc.).
- Step 3: Draft a policy based on the results of your counseling.
- Step 4: Decide how much you can contribute and choose your payment method (annually, semi-annually, quarterly, or monthly).
- Step 5: Sign the papers, complete the documentation, and make your initial payment.
- Step 6: Receive the hard copy of your insurance policy, which contains all the detailed information about your coverage.
Benefits of insurance:
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Provides security and protection for unforeseen events.
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Serves as medical support.
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Acts as a long-term savings.
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Gives your family financial security.
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Offers peace of mind knowing you’re protected.
If you’re still in doubt about whether or not insurance is for you, that’s okay. It takes time to understand and commit to it. Just remember—the earlier you start, the earlier you’ll enjoy its benefits.
And if insurance doesn’t feel like your path right now, don’t worry—there are other financial options you can explore, which I’ll share in the next part of this series.
2. Insurance + Investment
Many companies now offer “Insurance + Investment”—a policy designed to grow your money while keeping you protected.
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Usually has a 10-year fixed payment period.
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Requires patience and consistency; withdrawals are limited during the holding period.
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Money is pooled and invested in stocks, converted to NAVpu (Net Asset Value per Unit).
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Your insurance company manages everything; your role is to secure payments and monitor your fund online.
Once you’re familiar with both insurance and investment, you’ll come across the term “holding period.” Simply put, this is the time when you’re not allowed to make any withdrawals from your savings.
Because investments are meant to be a long-term financial goal, patience is essential. If you’re someone who often withdraws and spends, this option may not fit your lifestyle—better to keep a separate savings account for your daily and emergency expenses.
Tips for Investment
If you’re planning to start investing, here are some simple yet powerful tips to guide you:
- Start Early.
Like I mentioned earlier, the earlier you start, the earlier you’ll reap the benefits of investing. The longer your investment period, the higher the potential returns. - Save More.
While you don’t need a huge starting amount, the more you consistently save, the greater your returns will be at maturity. Invest only what you can confidently commit to. - Be Consistent.
Consistency is the secret to success. Pay on time and avoid unnecessary withdrawals—this ensures your fund grows without interruption. - Choose an Investment That Fits You.
Never invest in something you don’t understand. Ask yourself your main reason for investing and assess if your current cash flow allows you to sustain it. - Pick a Hassle-Free Payment Method.
If you’re working full-time, visiting branches to pay can be inconvenient. Opt for easier methods such as auto-debit or online payments to stay consistent with less stress.
If you’re not ready, speak with a financial advisor or check these top investment companies in the Philippines:
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Sun Life: Life Insurance, Investment & Group Benefits
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Philam Life: Leading Insurance Company
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Manulife: Insurance & Investment Solutions
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Pru Life UK: Investment-linked and Health Insurance
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AXA Philippines: Life Insurance and Investment
As Albert Einstein once said:
“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”
Investing may seem intimidating at first, but with time, patience, and consistency, it can transform your financial journey. 🌱
3. High-Interest Savings Accounts (Medium-Term Goals)
Unlike the first two options—emergency fund and insurance/investment—which are designed for long-term financial goals, this option falls under medium-term financial goals.
As the name suggests, medium-term goals are savings options with a holding period of around 5–7 years. While insurance and investment require time to grow your money, certain banks and financial institutions offer accounts with higher interest rates than regular savings accounts, giving your money the chance to grow faster within a shorter time frame.
For example, in my blog Top 5 Passive Income I’m Considering, I mentioned PAG-IBIG MP2 as one of the passive income options I’m exploring. This account is perfect for medium-term goals because it only requires a maximum five-year holding period, while still offering competitive interest rates.
Why PAG-IBIG MP2 Is a Great Medium-Term Option
One of the best medium-term savings options is PAG-IBIG MP2, primarily because its interest rates are higher than most regular banks.
Since PAG-IBIG funds are invested in real estate, the amount you contribute is protected from depreciation. Another significant advantage is that your savings are insured by the government, giving you peace of mind that your money is secure even if the agency faces challenges.
If you want to explore more options for high-interest savings accounts, you can check out this blog:
Best Savings Accounts in the Philippines
This resource provides detailed information on each savings account, including the pros and cons, helping you choose the one that best fits your financial goals.
Summary
Living life to the fullest is important, but one of the keys to truly enjoying it is feeling secure and protected for the future. As I’ve emphasized throughout this blog, there’s no such thing as “too early” when it comes to setting your financial goals. What matters is that you take action—don’t let your plans stay as words on a piece of paper. Slowly, step by step, make them happen.
“Financial freedom can only be achieved by a conscious choice. It’s not an accident. It’s not just merely by thinking, it’s through grinding and doing what is necessary to get to that goal.”
— David Angway
The right time to start is now. Don’t let limitations or excuses hold you back. Turn every “No” into a “Yes” and take that first step toward your goals.
Do something today that your future self will thank you for. 🌱💪
