Emergency Fund Planning for Newlyweds: Expert Advice

Building Financial Stability from the Start

Newlywed couples face numerous financial adjustments as they begin their married life together. One crucial yet often overlooked aspect is establishing an emergency fund. Financial planner Mike Rini Sutikno highlights that this fund plays a vital role in maintaining family financial stability during unexpected events.

Understanding the Importance of Emergency Funds

An emergency fund acts as a financial buffer during crises such as job loss, serious illness, accidents, or business failures. Sutikno explains that while financial risks can affect anyone, having such a fund helps minimize these risks by providing necessary financial support during recovery periods when regular income might be disrupted.

Calculating the Ideal Emergency Fund Size

The general guideline for determining the appropriate size of an emergency fund is to have savings equivalent to six months of regular family expenses. For example, if a household's minimum monthly needs are Rp5 million, the emergency fund should be around Rp30 million. However, this amount can be adjusted based on specific family circumstances.

Special Considerations for Higher Savings Targets

• If income is unstable
• When there's only one income earner in the family
• For families with children

In such cases, financial experts recommend increasing the target to cover 9-12 months of expenses. The key is to tailor the savings goal according to individual family needs and financial situations.

Practical Steps to Building the Fund

1. Start with a separate account: Create a dedicated account specifically for the emergency fund to prevent commingling with daily expenses.
2. Begin with a manageable percentage: Sutikno suggests allocating at least 30% of income toward this fund, especially when financial resources are limited.
3. Choose the right financial instruments: Opt for liquid and low-risk options such as savings accounts, money market funds, or short-term deposits that allow easy access when needed.
4. Regular reviews and adjustments: Periodically assess the fund's adequacy in response to changes in family financial circumstances, such as increased expenses or additions to the family.

Maintaining Financial Resilience

By prioritizing the creation of an emergency fund, newlywed couples can establish a strong foundation for long-term financial resilience. This proactive approach helps navigate financial uncertainties with greater confidence and security.