Majority of Families Unprepared for Unexpected Expenses, Emergency Funds Key

Jakarta (ANTARA) — Unexpected expenses remain a primary challenge for many families in Indonesia, ranging from healthcare costs to home and vehicle repairs that often arise without planning. This situation has the potential to disrupt household financial stability, particularly for those without sufficient reserve funds. Data shows that public financial preparedness remains limited. According to Pew Research Center research, more than 50% of households experience at least one unexpected expense each year. Meanwhile, a Bankrate report states that only around 46% of households have sufficient emergency funds to cover living expenses for three months. This indicates that the majority of families remain vulnerable to financial shocks. Financial observers assess emergency funds as an essential component in maintaining family economic stability. These funds serve as a reserve to cover urgent needs without disrupting long-term savings or relying on high-interest debt. Generally, international standards recommend emergency funds equivalent to 3 to 6 months of expenses, or even 6 to 12 months for families with greater dependents. 5 Steps to Prepare Emergency Funds In practice, building emergency funds requires disciplined planning, from calculating needs, separating a dedicated account, to consistently setting aside income. Additionally, the funds should be placed in liquid, low-risk instruments to ensure easy access when needed. 1. Calculating Emergency Fund Needs The first step is to determine the emergency fund target. The calculation can be done by multiplying monthly expenses by the targeted number of months. For example, if a family’s monthly expenses amount to Rp8 million, then the emergency fund needs for 6 months reach Rp48 million, and for 12 months around Rp96 million. This calculation helps families gain a clearer picture of the target to achieve. 2. Separating an Emergency Fund Account Emergency funds should be kept in a separate account to avoid mixing with daily needs. This step is important to prevent unintentional use of the funds. 3. Setting Aside Funds Consistently Consistency is key in building emergency funds. Families can start by setting aside 10–20% of monthly income routinely before using it for other needs. Even starting from a small amount, this habit can help the emergency funds grow more steadily over time. 4. Choosing Liquid Instruments Emergency funds must be easily accessible at any time. Therefore, the chosen instruments should have high liquidity and low risk, such as savings accounts, short-term deposits, or money market mutual funds. The goal is not to chase high returns, but to ensure the funds are available when needed. 5. Conducting Periodic Evaluations Family financial needs can change over time. Therefore, the amount of emergency funds needs to be evaluated and adjusted periodically to remain relevant to current conditions. When Can Legal Loans Be Used? Nevertheless, not all families can immediately meet the ideal emergency fund target. In such conditions, some people consider quick-disbursing online loans as a temporary option to cover priority needs. Urgent needs still require short-term solutions. Observers suggest that families differentiate between priority needs and deferrable expenses before making financial decisions. Legal loans can serve as a temporary alternative if emergency funds are insufficient and the needs are urgent, provided users understand the repayment scheme, costs, and ability to repay. The use of digital financing also needs to consider aspects of transparency, legality, and platform security. Several licensed and OJK-supervised online loan services, such as Adapundi, are considered practical options for the public needing quick fund access. However, experts emphasise that loan usage must be done wisely and measurably to avoid creating new financial burdens in the future. Thus, strengthening financial literacy and emergency fund preparedness become important steps for families in facing economic uncertainties, while maintaining long-term financial resilience.