If the pandemic has taught us anything, it’s to expect the unexpected. How do you gear up to do that? By having a well-stocked emergency fund. These accounts are crucial. They can help keep you afloat during tough times or simply make it easy to deal with life’s curve balls. Here is a breakdown of the much-needed emergency fund.
The Why
Think of an emergency fund as a key cog in your financial vehicle. If something breaks, you can fix it and get back on the road in no time. An emergency fund also allows you the ability to take a financial detour. Want to take a chance on a slightly risky investment? You can, because you know you have the cushion of an emergency fund.
The How
If you’re struggling to pad your emergency fund, start small. Comb through your budget and trim expenses where you can. Then send that extra cash to your emergency account. As US News reports, even if you’re saving something like $50 a month, the key is to get into the habit. Once you see your savings building, you’ll likely be motivated to keep it going.
The What
You’ll want to keep your emergency fund in a savings account or a money market account. Check out your local credit union or community bank first, as they often offer some of the best savings rates. Once you choose the right account, the goal is to save between three and six months of expenses. Be patient. Start small and work your way up. When life’s next expected unexpected happens, you’ll be glad you have that fund.
Author: Chris O'Shea via SavvyMoney