Expenses can sometimes catch you by surprise: hospital bills, emergency car breakdowns, home repair, and other similar costs. Do you have enough funds to pay for any sudden expense?
An emergency fund comes in handy when you’re in a financial spot. It’s money you set aside solely to spend on unexpected expenses. The amount will vary with each person and situation. But financial experts recommend saving three-to-six month’s worth of living expenses.
Whatever amount you decide on, it should cover the following: food, utilities, housing, healthcare, debt, transport—the basics.
Why Worry Now?
Starting the fund now gives you peace of mind for your future. It’s a financial safety net that cushions the impact of unfortunate life events, from a job loss due to an economic downturn or an illness in the family. Some banks do provide healthcare savings, which Patriot Bank explains is ideal for people taking part in high deductible health care plans. But this type of savings is exclusive to your medical needs.
With an emergency fund, you can meet every type of expense without resorting to loans or dipping into your savings.
Emergency funds provide options in the face of trouble. If your car broke down, for example, you can have it fixed immediately and not worry about taking public transportation to work.
Starting Your Own
Begin your emergency fund by partnering with a bank you can trust. Your bank should provide options that promote convenience and control. You can also talk with a financial expert who will help create a plan that suits your current situation and works for your future needs.
While the three-to-six-month’s worth of living expenses is a good start, it may seem like an overwhelming amount of money. Instead of discouraging yourself with these numbers, start with a smaller goal. Save at least one to two week’s worth of your income. As the months progress, continue increasing the amount. Alternatively, you can calculate your emergency fund with online tools.
Apart from a savings account, you’ll also need a different mindset on expenses. Think of your emergency fund as a monthly bill. Doing so will encourage you to save more. Also, discipline is important. Practicing it ensures you’ll have enough in the future.
Save up for a rainy day and spare yourself from the unnecessary stress. Start your emergency fund today.