DAGUPAN CITY – The Bangko Sentral ng Pilipinas (BSP) reminds Filipinos of the importance of having an emergency fund.
This financial cushion can provide peace of mind and stability during unexpected events like accidents, illnesses, job loss, or natural disasters.
These unforeseen circumstances can disrupt one’s regular life, causing financial stress and instability.
Hence, Jim Ian Bautista, senior research specialist at the BSP North Luzon Regional Office, stressed the importance of having a safety net.
“Financial preparedness can help reduce anxiety during difficult times. Therefore, saving for an emergency fund should be a priority,” he said, emphasizing the significance of financial literacy and planning in understanding the value of saving and making sound investment decisions in order to achieve long-term financial security.
However, before diving into investments, he recommended that individuals first set aside an emergency fund – equivalent to three to six months’ worth of expenses – to ensure financial security during unexpected situations and avoid being caught off guard.
Regardless of the amount, Bautista stated that the key to financial security is to develop consistent saving habits.
“There is no one-size-fits-all approach. Some individuals may save 10 percent of their income, while others may set aside 20 percent, depending on their financial situation,” Bautista explained.
Once an emergency fund is established, individuals are better equipped to handle unexpected financial challenges and more confident in their everyday lives.
In addition to setting aside emergency funds, the BSP encouraged following a financial planning cycle to manage finances more effectively.
Bautista emphasized the importance of budgeting, advising that individuals should allocate a portion of their income to savings first, before covering daily expenses.
“The correct saving formula is: income minus savings equals expenses. This means setting aside savings immediately based on what one can afford upon receiving income,” Bautista said.
To better manage hard-earned money, the BSP advises allocating income according to the needs.
If the saving formula results in a negative income, the BSP recommends adjusting spending habits or looking into alternative sources of income.
Begin saving now
It is fine to reward oneself occasionally for accomplishments, but essential needs and expenses should always come first.
Meanwhile, Bautista advised saving money in banks for safekeeping while earning interest.
“For those with multiple income sources, saving in different banks is a recommended strategy because the Philippine Deposit Insurance Corporation (PDIC) insures each bank account up to P500,000. This ensures that even large savings can be fully secured,” he said.
The BSP has been actively conducting public information campaigns, offering free seminars on personal financial management, covering topics such as budgeting, saving, and currency security through programs like “Know Your Money” and “Currency Familiarization” to help Filipinos avoid debt and unnecessary spending.
Interested groups can request sessions via the BSP North Luzon Regional Office at reas-nlro@bsp.gov.ph.
Effective financial literacy and planning are essential tools for Filipinos to safeguard the future and maintain financial peace of mind.
Start creating financial plans to achieve life goals, prepare for the future, and live comfortably once financial stability is secured. (AMB/JCDR/PIA Pangasinan)