Building an Emergency Fund in 6 Months with a Minimum Wage: A Practical Solution Amid Limited Income

Having an adequate emergency fund is an essential part of personal financial planning, particularly for facing unexpected situations without being troubled by financial issues. However, for some individuals with limited incomes, such as a minimum wage, achieving an emergency fund in a short time often feels challenging. Despite this, it is not an impossible task.

According to Cermati.com, careful planning and strong commitment are key to building an emergency fund, even with a limited salary. Rina Asmara, a financial planner from Cermati.com, recommends starting with a simple step: determine the amount needed for the emergency fund and create a budget plan to reach that goal. “With a minimum wage, it is crucial to be disciplined in managing expenses to reach the emergency fund. Start by targeting 3-6 months of expenses, depending on your job and dependents,” said Rina.

Steps to Build an Emergency Fund in 6 Months

• Calculate Your Emergency Fund Needs:
  Typically, an emergency fund should be 3 to 6 times your monthly expenses. For example, if your monthly expenses are IDR 3,000,000, then the emergency fund you need to prepare is between IDR 9,000,000 to IDR 18,000,000.
   

• Create a Tight Budget:
  With a minimum wage, the first step is to create a strict budget. Allocate at least 20%-30% of your income for the emergency fund. For example, if the minimum wage in Jakarta in 2025 is IDR 5,000,000, you should set aside around IDR 1,000,000 to IDR 1,500,000 each month for the emergency fund.
   

• Reduce Unnecessary Expenses:
  Examine your spending and cut back on non-essential purchases. For instance, reduce spending on eating out, entertainment subscriptions, or non-urgent travel. The money saved can be allocated to your emergency fund.
   

• Choose Safe Storage Instruments:
  To ensure the emergency fund is easily accessible, keep it in a separate savings account or a financial product that offers high liquidity, such as a time deposit or money market mutual fund.
   

• Focus and Discipline:
  Discipline is key when saving for an emergency fund. Make sure you set aside money according to the budget plan and avoid using the emergency fund for other needs.
   

Solutions to Reach Your Emergency Fund Target

If you find it challenging to reach your emergency fund target within six months, here are some practical solutions:

• Increase Side Income:
  Look for a part-time job or freelance work to supplement your income, such as becoming an online ride-hailing driver or a freelancer in your area of expertise.
   

• Use Financial Apps:
  Use budgeting and financial tracking apps to monitor your spending and ensure you stay disciplined in achieving your emergency fund goal.
   

• Reduce Consumer Debt:
  Focus on paying off consumer debt such as credit card bills or online loans, and redirect the funds previously used for debt payments into your emergency fund savings.

Emergency Fund Achievement Simulation with Minimum Wage

Here’s a calculation example for the minimum wage in Jakarta in 2025, which is IDR 5,000,000:

Emergency Fund Target:

• Monthly Expenses: IDR 3,000,000

• Required Emergency Fund (3-6 months): IDR 9,000,000 to IDR 18,000,000
   

Emergency Fund Savings Allocation:

• Save 20% of salary: IDR 1,000,000 per month

In 6 months, you will have saved IDR 6,000,000.

Solutions to Cover the Shortfall:

To reach an emergency fund of IDR 9,000,000, you need to add IDR 3,000,000. You could look for additional sources of income or reduce spending on entertainment. If the target emergency fund is larger, for example, IDR 18,000,000, you could achieve it in approximately 8 months by allocating 30% of your salary, or IDR 1,500,000 per month.