Serious illness or accident can easily ruin one’s financial budget and plans. Image Credit: Getty images

Dubai: Cindy is the safekeeper of the family's money. Every month or two, she makes sure that her husband, who works for an oil and gas company, hands over a portion of his earnings.

She then safely tucks the money away in an envelope. Cindy says the secret packet serves as their emergency fund, which currently amounts to about three months of the husband's salary.

"This money is purely for emergency. This will come handy when something unplanned happens.

"We also have a separate bank account and some investments in real estate in the Philippines," Cindy says.

People go through many unexpected events in their lives and things like a sudden job loss, serious illness or accident can easily ruin one's financial budget and plans.

This is why you need to set up a special fund, which you can easily dip into when the unfortunate happens. Financial advisers always recommend that your emergency fund should be treated separately from your regular savings and investments.

Cindy prefers to keep her emergency money in dollars. She doesn't want to put it in a bank account either, so that any unplanned expense is easily covered.

"My husband is the only one who contributes to this because my salary is spent on other things.

"He earns in dollars, so we keep our crisis fund in the same currency. Besides, you can easily exchange dollars anywhere," she says.

The money proved useful recently when her husband was taken to a hospital in the UAE and later underwent a series of medical tests, which set the couple back to around Dh5,000 in six months.

"The first financial emergency happened when we were about to watch a movie at the mall. My husband complained he was not feeling well, so we had to cancel the movie and went straight to the hospital instead. What followed were a series of tests and medications that turned out to be expensive."

Ready for the worst

"He does not have medical insurance, so our emergency money proved really useful."

Letecia learned the hard way the importance of preparing for the worst.

The Filipino expatriate flew to Dubai in 2008 when a company offered her a marketing executive job. One month later, she lost her job.

Faced with an expiring visa and barely enough money for sustenance, Letecia scrambled to find an employer. She later landed in a shady job offer that forced her to exit the country at least twice. In one of those trips, she stayed on Kish island in Iran for one month.

"I didn't expect it to happen to me because I first came here with a guaranteed visa.

"That was a financially difficult time because I had no one to ask help from. I had no friends and relatives in Dubai."

"But it's all in the past. Now, I have a stable good-paying job and I promise myself not to be in the same financial situation again. Through that awful experience, I learned that if you have emergency money with you, you'll be able to go through the worst, so now I make sure I have that special fund."

Since she found a stable job, Letecia has been slowly building her emergency fund, which she keeps in a regular savings account, and by now it is worth about one month and a half of her monthly salary.

"I guess everyone should have that kind of money. As an expatriate, you can never be too sure what will happen in the future. You can have a job today and lose it tomorrow. Unexpected things happen a lot and you must be prepared all the time," she says.

however, some residents in the UAE say that they are unable to build emergency funds because their monthly earnings are barely enough to cover the cost of living.

Some residents who do have emergency money have kept it along with their regular savings and investments.

"I don't have any because my salary is just enough to cover day-to-day expenses and monthly provision for the family.

"If my husband finds a stable and permanent job, I would definitely set aside some cash for emergency," says one expatriate.