Wednesday, June 28, 2017
   
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Emergency Funds

There are a number of situations that arise in life that you simply do not have control over. Should these situations require immediate cash flow, it is essential to have emergency savings to fall back on until paychecks start up again.

What if:

  • You die?
  • You have a stroke?
  • You're in an accident?

You Should Ask Yourself:

  • Who will take care of my children?
  • Who will pay my mortgage?
  • Do I have enough money for my care?
  • Do I have adequate health insurance?
  • Will my work cover me until I get better?
An Emergency Fund is crucial for yourself and your family!

Try to save at least three months' worth of living expenses in an easy-to-access "liquid" account so that you will be better prepared to overcome emergency situations. Having money set aside for emergencies gives you the peace of mind that if something unfortunate happens, you will have a little financial cushioning to ride it out.

Situations may arise in your lives that will require you to have fast access to cash. Insurance may cover many of these scenarios for you, but there is always a chance that it won’t fully cover what you will need.

Here are a few examples:

  • You may lose your job;
  • Major repairs to your motor vehicle;
  • Major home expenses such as a broken water line, tree falling on your roof, fire, natural disaster effects, etc.;
  • Death in your family that requires you to help pay for the funeral.

How Much Should You Put In Your Emergency Funds Account?

Ultimately, you have to choose an amount that you’re comfortable with. Here are some of the options to choose from:

  • 2-3 months worth of take-home salary;
  • 3-6 months worth of living expenses;
  • Gradual build up of 5-15 percent of earnings per month.

Do not take money from your emergency funds to pay off anticipated expenses.

Where Should You Put Your Emergency Funds?

Place your emergency funds into a high-interest saving or current account.

Remember:

  • Go with a bank that offers quick and easy access to your fund and a competitive interest rate.
  • Check back periodically to see if you’re getting the best going rate. If you’re not, don’t be afraid to switch.

Start Building Your Emergency Funds Account Now!