The Three Most Often Ignored Necessary Expenses

Updated: June 14, 2024

Part of being financially smart is distinguishing between necessary and unnecessary expenses. We all know that food and shelter are necessities. Clothing too, but only to a reasonable extent.

And depending on our lifestyle, there may also be other essential costs that we need to pay for. But along with these, did you know that there are three necessary expenses that most of us ignore or, at the very least, overlook?

An Emergency Fund

The reason why we spend on shelter is to have a safe and secure place to stay. This same reason is what makes an emergency fund necessary.

“Buying” ourselves an emergency fund provides us with a cash safety net and immediate financial security. It eliminates worry and anxiety when a dire need for money comes to us.

Know more: How To Build an Emergency Fund


Much like an emergency fund, an insurance plan also provides us with safety and security. But more than that, it also allows us to leverage our money.

Emergency funds are limited to what we can save. But insurance can provide benefits beyond the amount of money we can keep every month.

For breadwinners, a term or life insurance plan will ensure that your family will not go into financial difficulties when something unfortunate happens to you.

Meanwhile, health insurance will ensure that your emergency fund doesn’t get much affected when minor medical emergencies come.

If you’re an employee, I advise that you learn about your company’s medical benefits. For freelancers and entrepreneurs, be sure that you have adequate health care coverage from an HMO.

Buying and paying for an insurance product may seem like a burden at first. But believe me when I say that they are real money savers.

Besides, some life insurance products now also double as an investment instrument that gives sufficient returns in the long term.

Retirement Plan:

The younger you are, the cheaper it is to avail a retirement plan. More importantly, the higher your returns will be when you finally retire.

A retirement plan can be designed and accordingly adjusted to fit your financial capabilities. Products such as Personal Equity and Retirement Account are even voluntary, which means you “spend” only what you can afford.

And lastly, expecting that your kids will financially support you when you grow old is NOT a retirement plan.

An emergency fund, life, and health insurance, and a retirement plan – are three necessary expenses that you should consider the next time you make a budget.

What to do next: Click here to start your financial journey with IMG Wealth Academy


  1. As always, nice article Fitz. May I just point out that all these three necessary expenses pertains to the most important expense according to Francisco Colayco – Your Future.

    Thus, instead of using INCOME less EXPENSES equals SAVINGS, we should then use INCOME less SAVINGS equals EXPENSES.

    We should save to buy the most important of all expenses and that is our future.

  2. I came upon your blog from the site. I must admit I didn’t expect the three most ignored expenses as emergency funds, retirement and insurance but upon reflection, I realized that you’re quite right. We Filipinos are not much into these things. In fact, emergency funds are seem to be non-existent for a lot of us, more so on the retirement funds. I read somewhere that we are the lowest in terms of savings as compared to our neighboring countries. I hope this will change but I’m not holding my breath. As for me and my husband, I’m glad to say that we have the emergency funds stashed somewhere, we also have insurance. Now we’re gearing towards our retirement funds, albeit a little bit late (we’re now in our mid 30s) but at least, we may have something when we retire like 25 years from now.

  3. […] stumbled upon Fitz Villafuerte’s blog explaining that insurance is one of the most often ignored necessary expenses.  Working in the corporate world before gave me the benefit of having a Medical Card.  […]

  4. For me assurance and insurance or personal health, car and house is a need for everyone. The risk is too high for a normal financial person if anything happen such as accident, this will make their saving down to zero anytime if without any insurance or assurance beside them.

    Retired Plan: most of the time already in the legal law that everyone have to paid for it, so no one can run out from it unless you work in illegal job.

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