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11.02.2009 / Why You Need an Emergency Fund

The biggest fact of life is that stuff happens. Life events - both good and bad - can happen to anyone, especially in the current environment. From job loss, illness, accidents, unexpected car repairs, death in the family, or divorce, you need to be prepared. If you and your family are from living paycheck to paycheck, you might not be prepared when life hands you lemons.

"A great way to start an emergency fund is to start a savings account - no matter how much you have to save."

A great way to start an emergency fund is to start a savings account – no matter how much you have to save. Below are the top three steps to get you started:

  1. Start slow and figure out how much you may need. You’ve probably heard that you need three month’s pay. This can be great, but daunting to kick start a savings program. As you start, your first goal should be to set aside one week’s pay, take care of your ongoing debt, and THEN go back and start saving toward three months salary.
  2. Keep your emergency fund for emergencies. If you’re saving for something else (like holiday presents or a down payment) keep that money separate from your emergency fund. This keeps you from dipping into your savings for everyday expenses.
  3. Start your savings plan ASAP. The biggest mistake people make is holding off on starting to save. Start saving as soon as you can – saving up a bit at a time – and you’ll feel better about your financial situation.

Do you have any tips that you’ve find are helpful?  Please share them.

Posted at 02:03 PM | Permalink
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