Emerging Funds – What You Need to Know
“Save money and money will save you.”
This just means setting aside a certain amount of funds that you can tap into afterwards in emergency situations either by saving money from your salary or business (if you’re a businessman) or outsourcing your non-core business activities. It could be used for vehicle repairs, home maintenance, any unforeseen medical/business emergencies, if you lose your work/clients, paying for utilities, and so on.
Do you think an emergency fund would be essential? Ah, of course! When you can manage to save just a little proportion every month, you know it’s going to be worth it. But unless you don’t earn as much or have more immediate expenses to take care of, or you have emergency insurance plans, it mightn’t be a brilliant idea. Anyhow, this short guide will walk you through everything you need to know regarding emerging funds.
Let’s get going!
Where do I Start?
“Everything you do now is for the future.”
Once you’ve decided to open a savings account (personal/business), the next concern that immediately springs to mind is – how often should you conserve? An emergency fund should have at least a couple of months to be able to pay your most important bills. For starters, three months of your earnings or revenue is an excellent minimum.
For businesses, outsourcing is the best way to save money. As Peter Drucker says,
“Do what you do best, outsource the rest”
That’s true, the more you avoid your fixed monthly costs the more autonomous and flexible you will be to manage and control your monthly expenses. Outsourcing is the present and future of every business today. Why to hire expensive accountants and pay higher salaries, medical and life insurances, end of service benefits, air tickets, and of course regular training when you can outsource bookkeeping and as well as CFO services and get 10 times better results at a fraction of cost? Why to hire a dedicated internal auditor when you can outsource internal audit services on a bi-yearly or yearly basis? Why to hire a permanent tax accountant when you can get tax consultants in UAE to review your tax records and file monthly/quarterly VAT returns? Why to hire permanent HR staff who only search CVs and you spend plenty of your expensive hours just to find out that the candidate does not match the requirements? Apart from saving money by outsourcing these services, why NOT avail even more discounts by outsourcing all these tasks as bulk to a single service provider like Push Digits Chartered Accountants who can offer you bulk discounts due to economies of scale it will achieve by having a variety of works from you? The key point is, outsource EVERY possible process in your organization to avoid regular fixed costs.
How Do I Do It?
“If you’re saving you’re succeeding.”
The simplest way to set up an emergency fund is to save money once your paycheck/business earning comes in every month. The most convenient way to do this is by establishing a standing order for some amount. This can allow you to move whatever money you left from your current account to your savings at the end of each month.
Use a Separate Account
One smart way is to set some money away at the start of the month, or as soon as the paycheck/customer payments come in. The level may be set monthly, or it may depend entirely on your expenditures. You should keep the balance in a dedicated account to ensure you don’t waste your money unintentionally.
Choosing a profit-sharing account with any bank is another tactic in the book to help you make savings smoother. Islamic banking is emerging and growing every passing day due to a lot of benefits it brings in. Sharia-compliant fixed deposit accounts in the UAE are becoming the primary choice for many investors. Almost every Owners’ Association in Dubai has fixed deposit accounts under Islamic banking. Not to mention, the value of these fixed deposits are in hundreds of million dirhams.
Pay in Extra
“The more, the merrier.”
When you get any extra money from a big client or bonus at employment, a tax refund, an inheritance, or maybe you settled off debt and are left with far more money every month, you can raise your savings. You could put the money into your savings account and faster build up your emergency fund.
One Last Thing
Emergency funds may do more than simply provide for unforeseen expenditures. Begin the building of your emergency fund as a major priority part of your overall financial strategy. Plan in the longer run, and not just for emergency situations. Finally, make sure to keep it separate from other accounts.