Let’s start this out with some harsh reality……\u00a0 If you cannot save something every month to cover emergencies and other to-be-expected unusual expenses….you are not living within your means.\u00a0 Having access to a credit card is not the same as emergency funds.\u00a0 If you can put something aside every month…YOU ARE SPENDING TOO MUCH MONEY!\u00a0 There, I said it.
\nEmergency funds can be a lifesaver. Do you have extra funds saved for unexpected times? If not, it’s time to consider how much you’ll need if you fall on hard times.
\nEmergency funds can be helpful for everyone. Any unexpected hit to your finances, and unanticipated illness or a natural disaster might all be reasons you may need money right away.
\nWhat is an emergency fund?
\nAn emergency fund is designed to keep your life intact during temporary setbacks and to help you avoid unnecessary debt. That means things like car insurance premiums and regular home maintenance (and other anticipated bills) should not be considered emergencies. The same is true of credit card bills for vacations.
\nHow much emergency savings is enough?
\nIn general, your emergency fund should cover three to six months of expenses. How much you’ll need will vary based on your financial situation, including the vulnerability of your income.
\nFor example, a one-earner household is more vulnerable than a two-earner household when it comes to paychecks. So the one-earner family should generally set aside more for emergencies. Or if you don’t have disability insurance, you might consider setting aside a bigger balance in an emergency account.
\nCheck with your employer about benefits
\nSome companies provide payment for accrued vacation and\/or sick leave to laid off employees. If your company provides such benefits and you maintain significant balances in these accounts, you may not need as much in an emergency fund (at least to help you weather an unexpected layoff).
\nHere are a few items to consider as you plan your emergency fund:
\n\u2022 Consider your ongoing debt payments. Putting excess cash toward high-interest credit card balances might make more sense than funding a savings account that earns four percent interest. The best option is to put money toward both your debt and your savings.<\/p>\n
\u2022 Determine what can be reduced and postponed. These may be items like retirement plan contributions, vacations and entertainment. Ask yourself, “How much will I need to cover my minimum monthly expenses without resorting to credit cards or lines of credit?”<\/p>\n
\u2022 Don’t wait to start saving. You can start small and increase contributions as you receive pay increases or windfalls. The money should be liquid \u2014 easy to get at \u2014 so don’t put it in investments with withdrawal penalties. A savings or money market account is a great place to set aside cash for a rainy day.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Let’s start this out with some harsh reality……\u00a0 If you cannot save something every month to cover emergencies and other to-be-expected unusual expenses….you are not living within your means.\u00a0 Having access to a credit card is not the same as emergency funds.\u00a0 If you can put something aside every month…YOU ARE SPENDING TOO MUCH MONEY!\u00a0 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\n