Having emergency savings is extremely important in today’s economic environment. It may be the most significant difference between those who manage to stay afloat and those who are sinking into financial debt. Emergency savings of 3 to 6 months of expenses allows you to meet unexpected financial challenges such as:
• Car repairs
• Medical expenses
• Home repairs
• Other emergency expenses
Having an emergency fund also allows you to plan to spend all your money without worrying about taking care of emergencies that arise. Below are more emergency fund tips.
Emergency Funds give you Peace of Mind
The emergency fund not only allows you to cover these expenses, but it gives you the peace of mind that you are prepared for financial emergencies.
Not having an emergency savings fund is a reason many individuals borrow money at high interest-rates through alternative and predatory lenders.
An emergency fund or what some call a contingency fund allows you to stick to a spending plan without having to change and interrupt your budget to meet unexpected costs and expenses. You can plan better and manage your finances knowing you can cover emergency expenses as they arise.
Keep Emergency Funds Where you can get to Them
You will want to keep your emergency savings in an account that you will have ease in the ability to access as needed. This is called liquidity or the funds being liquid.
How easy is it for you to get access to the money when you need them?
It is best to keep emergency savings in a bank or credit union savings account so I can get to it when I need it. These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds. Keeping your emergency fund separate from checking accounts makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses.
Get the Family Involved in Saving for the Emergency Fund
You may think that it is not so easy to save $500 to $1000 for emergencies. One way to make it easier is to get the entire family involved in building the emergency fund. It may be easier if you involve your whole family in meeting the challenge. Explain the importance of emergency savings to your family and get them to help by cutting expenses on the power, food, entertainment, and more.
Make your emergency savings fund your family financial goal and plan how the family will meet the goal. Keep the family updated and when you meet the goal be sure to celebrate maybe with a family fun night.
Having emergency savings is essential in today’s current economic climate. Having emergency savings will give you peace of mind about your finances. Set goals and celebrate when you meet the emergency savings goal. You need an emergency fund, and with some work and a plan, you can have an emergency fund for emergency expenses and peace of mind over your finances.