Expect The Unexpected
Posted by gtong on February 6th, 2010
How many times have you had unexpected things happen to you? Big unexpected events can really affect you financially, such as a serious injury or losing your job. As scary as it might be to think about, be sure you have something to fall back on if the unexpected finds you.
Where to keep it?: An emergency fund should be easily accessible, so you shouldn’t be depositing into an account where you are penalized if you need to make a withdraw. You can also try to have your savings work for you by placing it in a savings account, it may not grow by much, but it will give you some extra cash when you need it.
What is my goal?: You’ll need to calculate how much money you use per month. Your goal at minimum should be around 3 to 6 months. The time period you should be trying to save for is how long you expect to be out of the workforce if something happens.
How much do you deposit?: There are different methods of trying to save for an emergency fund. You can stash away any extra cash you have as fast as you can to build up your emergency fund. You can also save for it slowly by depositing a certain percentage each paycheck into it. It depends on what you feel comfortable with.
When do I use it?: You should never use your emergency fund for casual spending. It should be used for emergencies only. If something does happen, and you are forced to use money from it, you should replenish the funds after you are back on your feet.
Do you have an emergency fund? How much do you save up?
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