Have you heard the saying that when you wonder how come the cooking gas has stayed for long is when it goes kapoot! Especially while you are cooking supper! It’s not really a saying but my point is, emergencies show up at the most inconvenient times. That’s why you plan for unforeseen circumstances and future expenses by creating an emergency or sinking fund. A real saying goes like this ‘Failing to plan is planning to fail’
So what is an emergency fund? Emergency funds are savings for unplanned expenses, like a job loss or unforeseen medical procedure.
What is a sinking fund? Sinking funds are savings you set aside for specific planned expenses, like insurance, or home furniture.
Now that we know the difference, how do we create each?
How to create an Emergency fund
It’s difficult to calculate how much you will need for a future emergency. Experts recommend saving between 3 to 6 months of your current living expenses. The emergency fund is not for a specific purpose but is to buffer you in case of an unplanned expense such as a job loss or illness. Therefore, one way of doing this is opening a separate savings account such as the ABC Pure Savers account and saving periodically towards your goal.
How to create a Sinking fund
A sinking fund is used for planned expenses and is to put money aside for a specific goal. First, decide on the specific goal and time frame you would like to achieve it. Secondly, calculate how much you would need to contribute per month to reach the desired amount. Then open a savings account such as the ABC Target account where you will deposit on a monthly basis until you reach the target.
| Emergency Fund | Sinking Fund |
| Unplanned expenses | Planned expenses |
| No specific goal | Specific goal |
| Save via ABC Pure Savers account | Save via ABC Target Account |
Get started today and secure your future, whether it’s through an Emergency or Sinking fund or even both. Get in touch with us via talk2us@abcthebank.com or call/whatsapp us via 0701 700700