Emergency Fund

The Merriam-Webster dictionary’s definition of emergency is an unforeseen combination of circumstances or an urgent need for assistance or relief. Well, you never know when an emergency is going to happen. There are many reasons why it is a great idea to create an emergency fund plan. It helps with unexpected expenses, and it will also help you avoid more debt from high interest credit cards. 

So how much should you plan to save, you may ask?

Most experts recommend 3 to 6 months of living expenses. 30% of people in 2023 have some emergency savings, but not enough to cover three months of expenses. This is particularly true in the case of job loss or illness.  Having this type of savings should cover minimum payments, basic utilities and necessities.

There are emergency fund calculators to help you find figures that you should save, you can find these online. Just be careful about what you are using for a website and what type of information you are inputting.

Here are some steps you can take to create and build an emergency fund.

  • The first step is to set a goal and once it is met keep saving, you can never have too much in savings.
  • Secondly find ways to incorporate savings into daily habits, figure out how you can save and cut back.
  • Third set up a weekly or monthly direct deposit. Having a little amount of money deposited into your account will help you save.  
  • Lastly review your goals on a regular basis. Reviewing your savings can help you see how you are doing with your savings and where you might be able to adjust if needed.

Now the question is where to put your emergency funds.

  • A savings or
  • money market account,

is the best place to put your savings.

This way you can gain interest while your money sits, and you can have easy access to it at any time you need.

When should you use your emergency fund?

Situations such as a job loss, major vehicle or home repairs, and medical emergencies.

Now that you know how to create an emergency fund and how to prepare for the unexpected. 

Need an account to save? Check them out here!