Why you need emergency savings?

“The best time to plant a tree was 20 years ago. The second best time is now.” –Chinese Proverb.

I have a water tank at home. So does my neighbour. Actually he has two water tanks. He harvests rain water from his roof and stores it in a large tank. When there is a water shortage he pumps this water into a small overhead tank which feeds the house.

I have always lived in a house with some kind of water storage. And it actually makes sense. You can’t entirely rely on the municipal water supply for such an essential commodity like water.

The question I then have is why do so many of us operate without any kind of emergency savings? We live hand to mouth as though our incomes are guaranteed to continue indefinitely? We are one pay cheque from being broke!

Just like a random water mains burst causes our taps to run dry, the Corona crisis is going to dry up our incomes. Global job losses have sky rocketed and many people are relying on their governments to bail them out.

However all hope is not lost. Remember the best time to plant a tree was 20 years ago. The next best time is today. You can start building a savings habit even in this period.

Just like it is inconceivable to live in a house without water storage, it is also inconceivable not to have emergency savings!