Have you ever run out of gas on the road but had no money in your account to buy more? Or have you suddenly had to go to the hospital but didn't have any money at all?

The scenarios above are examples of why an emergency fund is important. We never know what the future holds, so it's crucial to prepare early. This includes preparing an emergency fund.

However, calculating an emergency fund shouldn't be done carelessly, because everyone has different financial needs. Here's how to calculate the right emergency fund and its simulation.

How to Calculate an Emergency Fund

1. Calculate total monthly expenses

The first step is to calculate your total monthly expenses. You can do this by recording all your daily expenses using an app and then evaluating them regularly.

Usually, there are 4 monthly expense categories calculated for an emergency fund: rent or house installments, utilities (electricity, water, gas), food costs, and other burdens. This is because these four expense categories must still be met even if your income is zero.

2. Multiply the total monthly expenses by 3

After you've found your monthly expense amount, the next step is to multiply that number by 3. For example, if your monthly expenses are Rp2,000,000 per month, then you need to save at least Rp6,000,000 as an emergency fund.

Why the number 3? The number 3 here represents the estimated number of months you might need to find a new job if you ever lose your current one. Three months is the minimum; the more emergency funds you manage to save, the better.

The number of months will also be different if you are married. The amount of emergency fund for a family usually varies, with a minimum of 6 months of monthly expenses. So, if your monthly expenses for yourself, your wife, and your children reach Rp4,000,000 per month, then you need to save at least Rp24,000,000 as an emergency fund.

Emergency Fund Calculation Simulation

Pak Eko has a family consisting of Bu Ani, Adi (9 years old), Josephine (4 years old), and Riri (6 months old). Here is a simulation of the emergency fund Pak Eko needs to save after considering each child's needs.

You can collect and store this emergency fund in an easily accessible place, such as a separate bank account. The goal is for the funds to be readily available when you need them.

So, what if you have an urgent need but your emergency fund isn't enough yet? Easy! You can use an Honest credit card. With this card, you can pay for urgent needs by simply tapping the card or your phone on an EDC machine.

Paying bills with this credit card is also easy. Just copy and enter the card number into the marketplace app you're using, and the transaction will be completed in just a few seconds. Your shopping history using this card can also be viewed in the Honest app, so you can evaluate it regularly.

But remember! A credit card is only a tool to facilitate urgent payments. Pay your card installments immediately before the billing date arrives so you don't have to pay interest and late fees.