Take Importance in Emergency Funds

 

Life throws things at us when we least expect it. It may be an illness, a car accident, or even a lay-off from a job. Whatever it is that life throws, you can bet it is going to cost you money.

 

This is why you need an emergency fund. Everyone should have at least three to six months of living expenses in a savings account that is reasonably easy to get to.

 

Saving up the money for your emergency funds is easier than you might expect. It all goes along with ‘Pay Yourself First.’

 

Set a budget and determine how much you can put into a savings account. Until you have reached your savings goal of having three to six months of expenses in your savings account, save every extra dime that you can lay your hands on – even if this means not going out to a nice dinner or seeing a movie. Getting your emergency funds saved should be your utmost priority.

 

Once you have your emergency funds saved, preferably in an interest bearing pass book savings account, make sure that you leave it alone. Remember, it is only for emergencies. Needing to buy a new dress for a date is not an emergency. Needing to pay for car repairs, however, is an emergency. Really think long and hard before using your emergency funds!

 

When you must use your emergency funds, make sure that you replace those funds as quickly as possible. This probably means that you will have to really tighten your belt, and forgo the dinners and movies again – for a while. But when you have an emergency, you will be thankful that you did save the funds, and you will realize just how important doing so really was.

 

Your emergency savings should not be invested. Again, it needs to be readily accessible, in a savings account. It is also a good idea to have a debit card for that savings account, in the event that your emergency occurs outside of banking hours.

 

However, use caution, and put that debit card away – don’t use it unless there is an emergency!

 

And that reminds me…