What Is It
An emergency fund is money set aside to be used in unexpected, costly situations such as car troubles, job loss or a hospital visit. These unexpected events can happen to anyone at any time. This is why it’s essential to start an emergency fund as soon as you can.
Why It’s Important
Acting as a safety net between you and the ups and downs in life, these protective finances can help you avoid falling deep into debt or taking out expensive loans. Most importantly, emergency funds create a buffer between you and the unpredicted events life hold. Having savings set aside provides you with the peace of mind knowing it’s there if you should need it.
How Much To Save
Experts recommend having an emergency fund that can carry you through three to six months of expenses. But as we all know, building savings is a lot easier said than done. Start off slow and set a goal of $1,000. Once your comfortable putting money away on a regular basis and have paid down debt, you can adjust your budget to aim for a higher goal. Over time you should continue to grow your emergency savings so that it’s never completely wiped out.
How To Build It
There are many ways to start saving an emergency fund. Here are just a few ideas that can help you jump start the process:
- Take up one of these part-time jobs or side gigs to supplement your income
- Sell items you no longer want or need
- Check here for unclaimed funds
- Review these 9 tips to make saving painless
Where To Stash It
Emergencies are often urgent and stressful situations. You don’t want to have to worry about accessing the money you need. For this reason, these funds should always be kept in a place that is easily accessible. A practical option is a checking account with a debit card and check writing options. This checking account should most definitely remain separate than the account you use daily. One tip is to open this checking account at a completely different bank then you won’t be tempted to dip into. As they say, out of sight, out of mind!
Start Building Your Emergency Fund Today!
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