Create an emergency fund to deal with unforeseen circumstances – Advice from a financial analyst

Reverend Daniel Ogbarmey Tetteh

Securities and Exchange Commission chief executive Rev. Daniel Ogbarmey Tetteh advised workers to set up an emergency fund to deal with unforeseen circumstances.

Although one can have a secure job that provides constant income, Mr Ogbarmey Tetteh said it is prudent to be prepared for any eventuality.

speaking on Joy FMit is Great morning show On Thursday, he advised that at least the equivalent of 6 months’ salary be kept in an emergency fund. According to him, the impact of the Covid-19 pandemic on the unemployment situation in the country highlights the need for such an initiative.

“What the experts say is, in an emergency fund, you need to have at least 6 months of your monthly income sitting there.

The idea is that assuming you lose your job, within six months you should be able to turn things around and find your feet. But at least during this six month period, if you have the equivalent of your 6 months salary in this emergency fund, it can keep you going.

Look at Covid-19 and how it has affected different sectors. This is an outcome that I think people should prepare for,” he said.

Although 6 months’ salary is the benchmark, he insisted that “it doesn’t mean that when you get to 6 months you relax. The more, the better.

Reverend Tetteh further advised that the emergency fund should be kept in an investment account.

“From my experience, I’ll tell you it’s best to put it in an investment account. With an emergency fund, you don’t put it in an account that will have a certain level of risk. You put it in a risk-free or relatively low-risk vehicle,” he added.

For fun-loving people, he urged them to set up a lifestyle fund to ensure they have the means to meet their luxurious expenses.

“Create a lifestyle fund because you want to go to Dubai at some point with the family. So you create a fund and put some money aside so that when the time comes for you to have that celebration, you’re not now looking for people and stressing yourself out,” he said.

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