Now, more than ever, we are reminded why having an emergency fund is important. You could lose your job, have a medical emergency or a global pandemic could upend your life. Either way, an emergency fund will be the reason why you have a security net that provides you with room to make your next decision.
At Cowrywise, we believe in flexibility and providing our customers with diverse options. Yet we did not have a dedicated emergency plan. Sure we have Money Market Funds and Stash which are immensely flexible and funds can be accessed at any time. After much user research and feedback, we learned that there was a big gap that we could help bridge. Thus our new feature, the emergency plan, was born.
In this article, we will cover:
1. What is an emergency fund?
2. Why should you have an emergency fund?
3. How does the Cowrywise emergency plan work?
4. How to set up your emergency plan
What is an emergency fund?
An emergency fund is a pool of money which is set aside specifically to cover the financial surprises life may decide to throw your way. Everyone knows that there’s really nothing worse than having an emergency suddenly occur and not having the funds to cover them.
By building up your emergency fund, you can be prepared to pay for unexpected emergencies without having to turn to loans or other borrowing options that create unnecessary stress. While an emergency fund won’t solve all your money problems, it’s a great start to getting your finances headed in the right direction.
Why should you have an emergency fund?
Having a robust emergency fund gives you peace of mind. No one wants to live one paycheck away from not being able to pay the rent or one car breakdown away from not being able to get to work. It can also be a way to prepare you for something as sudden as the global pandemic like these six Nigerians we spoke to.
It also gives you some freedom. If you decide to leave a relationship or your job becomes so unbearable that you have to leave before finding another or you want to go back to school or start your own business, having an emergency fund gives you the freedom to do those things.
Keeping that money separate from the money you use to pay bills or other financial goals you have can help you resist the urge to spend it on other things. Sometimes when you see a big number in your bank account you get a little too quick to purchase things you really do not need. Keeping this money separate can help you avoid temptation.
Here is a 1-minute video that explains why you need to build up your emergency fund.
How does the Cowrywise emergency plan work?
The emergency plan on Cowrywise uses the information about your expenses and income provided by you to recommend an emergency plan that works for you. The recommended target amount of the emergency plan is 5 times your monthly expenses. If you pay rent annually, remember to add the monthly equivalent of your annual rent to your monthly expenses. This means if your source of income disappears, for example, you are well prepared to live life normally for the next 5 months without having financial worries. Hence, we help you estimate a fit-for-purpose emergency fund target that truly reflects your monthly expense patterns.
The recommended target amount of the emergency plan is 5 times your monthly expenses. If your monthly expense is NGN300,000 (remember to include the monthly value of your house rent), our recommended emergency fund target for you is NGN1,500,000.
To build up the emergency fund, our financial tool utilises your income information to recommend between 10% and 20% of your monthly income and gives you an estimated time period over which your customised emergency fund will be 100% funded.
Did you know? Saving into your emergency fund can either be automated on a weekly or monthly basis. You can also top it up anytime you want. It is a taste of freedom! Automated savings is our recommendation.
Here are a few perks of the Cowrywise emergency plan:
- Customised for you: Our emergency plan is customised just for you based on your income level and expense patterns.
- Safety of funds: To ensure your emergency funds live up to its calling, they are invested in low-risk mutual funds managed by fund managers licenced by the Securities and Exchange Commission (SEC).
- Easy accessibility: You can make withdrawals from your emergency fund anytime an emergency happens.
- Real-time monitoring: We keep you accountable to meet your emergency fund target by giving a real-time visual representation of how you are doing towards meeting your target.
- Earn returns: The sweet part is that you earn returns on your emergency funds. The return you earn is determined by the returns from the money market funds the savings are put into.
Please note that similar to purchasing mutual funds on Cowrywise, depositing into Emergency Funds requires a 1.5% payment processing fee. This is however capped at N2000 which means that you don’t get charged more than that, irrespective of the amount you fund your Emergency Fund with.
How to set up your emergency plan
Now we know all about emergency funds and how they work. Here is a step-by-step guide to setting up your emergency plan:
1. Login to your Cowrywise account. Sign up for free if you don’t have an account.
2. Tap the emergency plan card on your home screen.
3. Take the quiz about your income and expenses.
4. Set up your emergency plan by selecting how often you would like to save.
5. Choose your payment method and begin saving in your emergency plan.
Never be unprepared for an unplanned event again, set up your emergency plan and begin saving for rainy days.
Wow! This is well explained.
Thank you for the clarifications. You guys are truly reflecting your core values. Good job!
Please do not go ahead with the mandatory 24 hours wait period during the withdrawal from stash to a personal bank account
It is too much of an inconvenience to be a feature. Please do reconsider.
Some of your competitors do not have this restriction in place
It would be very much appreciated if this can be an option we users can select in terms of security
Good , my very concern is that I have been using Cowrywise in order to discipline myself in saving for my yearly house rent now that am in need of fund , hoping of transferring from stach to my bank account
My concern now is how much can someone withdraw from stach account without flagged , currently am in emergency and the only hope is Cowrywise
Yeah, the 24hrs is not bad but at the other hand, 24hrs withdrawal in case of emergency will be the worst thing so far because nobody knows what is going to happen in the next few minutes or even seconds
I think your suggestion is very okay by me.
I really enjoyed the short brief lecture but still hoping on the higher investment like the bill gate etc.risky I think
Wow I think I love this app my first time to save money in cowrywise i will trust them
Excellent article, investment lifecycle gibberish on cowrywise was well explained ?
The ideal of 24hr waiting time to withdraw from stash is still not explain here, even though u said it might be inconvenient for a short time but on the long run the customer will appreciate it doesn’t answer the question of why the long time (24hr) withdrawal will be appreciated.
What is the sole reason for 24hrs delay, even if my fund are in the care of third party custodian. What are modality of updating withdrawal time of 24hr when I can make a withdrawal in few minutes. It still not clear.
I believe we are supposed to be going forward here, not back ward. Technology is advancing that why we on the era of 5G.
Pls it doesn’t sound healthy.
Really good, have been using cowrywise pass a year and I don’t know issue with my investment acc, but last month on my willdraw date I willdraw to stash and instead for me to press transfer to bank account I mistakenly press transfer to plan, so painful because the money was refunded to the plan and i have planned on the date already, well that is on that, I just want to say you should keep Doing good work , helping us to do it well on the plan account,leave the willdraw date for us , where by if we mistakenly resend back the to plan please let us be able to willdraw back to stash at desame day . Thank you
Love this application
Cowrywise to the world✈️✈️
You guys are really doing a great work out there?…keep it up?
Wow. I think with this explanation, I’m getting somewhere
This is smart! Thank you cowrywise for your services, it’s 100%
A write up of how cowrywise is just an investment company and not a bank.
You kept repeating you are not a bank but an asset management…were you bank 3 or 4 years ago that i have been using cowrywise and there was instant withdrawals. I really do appreciate cowrywise because I have really cultivated the attitude of saving but am not cool with this recent development. There’s a reason for locking my savings to a particular day.
Keep up the good work
The investment part is well explained, thank you cowrywise for always doing a good job, however the reason for the 24-hour window for withdrawal is still not explained here. Withdrawing from stash should be quick as possible, at max should happen the same day. You say we shld plan ahead, we never can tell what may come up.
24-hours is a really big deal.
Insightful, I think you are doing really great.., thank you for always
Keep up the good work .
I like the investment
Appreciation to the detailed article,however the 24hours new approach on withdrawals may not be ideal for emergencies. Kindly take a second thought on this even in the midst of risk exposure. Thank you
Thanks for your help Cowrywise I have been using for a year and I have no problems, please keep up the good job?
But the ideal of 24 hrs honestly I don’t like it, I noticed it today when I make a withdrawal from my stash , please it’s so embarrassing
I beg you see to that.
I really don’t like that 24hrs withdrawal because the date I’m to withdraw my funds I know why Input that date there why must it be 24hrs I don’t accept this one
Honestly this 24 hours withdrawal is not making any sense to me.I have been using this app for the past 4 years and why I feel comfortable with it is because once withdrawal is made it’s being credited asap so you have nothing to worry about and that’s how I was able to invite others to join because they know they can access their funds asap .
Hello Guys,
I appreciate you guys alot. Been using cowrywise i think about 3yrs now.
This idea of 24hrs in stash is not buyable . I set the date for a particular reason. Kindly review.. i should be able to use my set saving on the proposed date set.
Thanks
U guys are so amazing Thank alot?this app is good
Keep up the good work