Introduction
An emergency fund is not just a financial cushion; it's a lifeline that can help you navigate through financial uncertainties without accumulating debt. In Kenya, where unexpected costs can arise from various quarters, such as medical emergencies or sudden loss of income, having an emergency fund is crucial.
Size of the Fund:
Financial experts in Kenya recommend having at least 3-6 months' worth of living expenses in an emergency fund. This can be particularly helpful during times of political instability or economic downturns, which can result in job losses or reduced income.
Where to Keep It
Your emergency fund should be easily accessible but not so accessible that you're tempted to dip into it for non-emergencies. A savings account with a reputable Kenyan bank is often a good choice. Some people also use mobile money services like M-Pesa for smaller emergency funds due to their ease of access.
When to Use It
This fund is strictly for emergencies. In the Kenyan context, this could mean sudden medical expenses, urgent home repairs due to extreme weather conditions, or unexpected school fees. It's not for planned expenses like holidays or buying non-essential items.