Tips on saving for the unexpected
rules of thumb, there is no “normal” way to handle your emergency fund.
Your emergency fund is a safety net that can help you avoid getting into a difficult financial situation due to a loss of income or unexpected, one-time expenses. Having one in place can reduce
stress, anxiety, and other emotions that could make handling
the non-financial aspects of an emergency much more difficult.
you need to make emergency home repairs or pay for emergency medical expenses. You would cover these from your emergency fund.
How much would a new furnace cost? If you could not work, how much would you need to cover essential expenses until you could? Asking yourself these kinds of questions will help you set a goal amount for your emergency fund.
Start small: If you haven’t started, consider putting $25 from every paycheck into a savings account. Even a few dollars can make a big impact in the long run. Check your budget or spending plan to see how much you can save after you’ve paid essential expenses and before budgeting for discretionary spending.
if things get busy!
As your life changes, the amount you need in your emergency fund will change as well. It’s a good idea to revisit your emergency fund plan every six months or any time you experience a life event that impacts your income. Marriage, starting or adding to your family, buying a home, and divorce are just a few examples of
when you may need to increase your emergency fund. A good savings plan can roll with the punches right alongside you!
debt and other goals?
Deciding whether you should pay down debt, save for other goals, or grow your emergency fund is all about the big picture. Everyone has different financials, so that picture will vary person-to-person. What will impact you the most financially? Paying down debt and saving money long term or having a plan B that allows you to keep making minimum payments if you lose income? There is no right or wrong answer.
the unexpected. So, make a plan and be ready for whatever
comes your way!
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