Vex Money! Emergency funds and how to save yourself from unplanned financial crisis

The waiter stood slightly leaned over holding the POS machine in his hands; we, both waiting for the confirmation notice of payment for the pasta and drinks we had ordered. “Ah, sir”, he bends down to whisper into my ears, ‘Sir, your ATM is not working’.

Jesu!(Read that in Baba Funke’s voice).

“Please, let’s try again”, I told him trying to be careful not to startle my date.

“Your PIN sir”. I punched in my PIN and waited another 45 seconds.

“Switch inoperative sir.  It must be network. Do you have another card?”.

Ayémi tèmí bá mi!(Baba Funke’s voice in my mind again).

It was around 2011. I had been friends with Ebere for about a year – over Twitter. This was our first meet up and so we thought the perfect place would be this Indian restaurant around Ademola Adetokunbo Street after work.

How embarrassing was this? What would she think about me now? I am not sure what my facial reaction was or if the sweat was beginning to appear, but she had picked up what was happening. She smiled at me and said, ‘Don’t worry Seye, thank God I brought vex money’.

Vex money! I didn’t even know what that meant. Aside from the phrase pronounced in her mixed Anambra accent all I heard was ‘thank God…something something money’.
I always remember this experience when it comes to staying away from financial wahala. And especially in the context of keeping a non-secure job.

How do you walk out of a shitty job in confidence without imagining the hunger and poverty that would become your new employer? How do you quit your job to face that passionate idea you’ve had coming a long time?

In her Daily Email challenges, Arese taught me an invaluable lesson about keeping what she calls Emergency Funds. According to her,

1. “We live in Nigeria, so the unexpected happens all the time, that in itself is a certainty. From the little things like your iPhone screen getting smashed, Car troubles, generator breaking down to the big things like job loss or business going through a tough time or oil and gas cybersecurity standards going low and letting cyber crimes happen around the world. We all go through these things at one point or the other but how prepared are we for financial surprises?
 
You have to systematically save towards your emergency fund because it is the foundation of your financial journey. An emergency fund is not there to make you money but to act as a financial cushion that protects your long-term investments from short-term unexpected expenses.
 
How to rock this task
2. Calculate how much you would need to survive if you lost your job or income from your business. What do your living expenses add up to each month? Then multiply by 6 or 9 that’s your goal.
3. Strictly define emergencies. Your car breaking down or having to pay hospital bills when you get ill unexpectedly those are emergencies…. A phone upgrade, a trip to Dubai or those YSL pumps on sale…do not qualify as an emergency.
4. Shore up your emergency fund a little with windfalls like Customized Gifts and bonuses and when you get money you can also commit to use a percentage of it to top up your emergency fund.
5. Don’t put it in a risky asset class (i.e. stocks), it’s not there to make you money.
6. Look for high-interest savings accounts or money market accounts to put it in(this I will talk about in another episode)
   Understand that your emergency fund is sort of like a revolving fund…you’ll have to spend from it at different points in time but you have to keep topping it up.

You see, when I first started calculating my emergency fund, my chest cut. It was for a 9 month period. It put into consideration that there would not be any form of balling or laulau spending. It meant if I didn’t make any money within the 9months I would practically be a hermit.  There was allowance for transportation- which was for the situation where I would need to go pitch to prospective clients or interview for jobs. I put into consideration personal care which meant buying some soap, cream or toothpaste. I put N10,000 for miscellaneous just in case somebody too close had a birthday that month. Of course, Internet was first because I would need that to gather information to bail me out and also communicate with friends and family.

But wait, did you just say “Even the one you earn is not enough to start saving for emergencies?” I thought that too.  Just like the day I went out with Ebere, things can happen. But will I be prepared? Was I prepared?