Financial emergencies can strike at any time, causing a great deal of anxiety. It's one of the primary reasons 11 million Filipinos have unpaid debt.
A recent survey conducted by the Bangko Sentral ng Pilipinas in 2021 reveals Filipinos borrow money to cope with unforeseen expenses, which can affect long-term financial stability.
But what are financial emergencies?
Types of financial emergencies
Unexpected expenses or loss of income can cause the following financial emergencies. These bills and payments can quickly drain your savings, making it difficult to plan for the future.
Medical emergency
Accidents, injuries, or sudden illnesses can send you to the emergency room. Depending on the medical attention you need, ER costs can start at ₱7,000 minimum. It's good if HMO and PhilHealth can cover the cost. But a serious medical emergency can incur significant out-of-pocket expenses, from specialty doctor fees to medications and rehabilitation.
Critical illness diagnosis
A critical illness can impair vital organs, affect bodily movement or cause physical changes. Heart disease, cancer, stroke, diabetes and pneumonia are some of the top critical illnesses in the Philippines.
Treating these conditions can be financially burdensome, especially when you must take unpaid leave or quit your job. According to a study by the Philippine Institute for Development Studies, cancer treatment costs can range from ₱120,000 to over ₱1 million. The cost of chemotherapy can vary from ₱20,000 to more than ₱120,000 a session, depending on the cancer being treated.
Natural calamities
Natural disasters, such as typhoons, earthquakes, or floods, are sudden events that cause widespread damage to property and infrastructure. The country, which experiences an average of 20 typhoons yearly, saw 925,000 homes damaged or destroyed by Super Typhoon Odette in 2021. Recovering from natural disasters often involves high-priced repairs, temporary housing expenses, and replacing lost or damaged belongings that fall on you to finance.
Job loss
Job loss is one of the top reasons to save six months' expenses in your emergency fund. A financial buffer allows you to take your time finding the right job fit, rather than rushing into the first available position just to get income flowing again.
Major car repairs
Sudden car repair bills can be excessive. A dead car battery alone will cost you ₱6,000 to replace. But with mechanical issues or car accidents, you're also looking at disruptions in your routines and income loss, primarily if you use it for business.