Emergency Fund. One of the things to expect in life is that there are certain unforeseen circumstances that might happen at any time which you have to be prepared for. Many unforeseen circumstances usually require funds to properly navigate and scale. This is why it is very important to always have one kept somewhere in case of a rainy day.
That being said, today we are going to be focusing on emergency funds. We are also going to take a look at why it is sing on emergency funds. We are also going to take a look at why it is important, among several other things, in this article today. Therefore, without further ado, if you are interested in knowing everything you need to know about this, keep on reading.
What is Emergency Fund
Emergency funds are simply money that is kept safe and is usually for the purpose of solving an emergency problem. Just as I have mentioned above, all the things to expect in life, there might be unforeseen circumstances that require an instant large sum of money to solve. When these circumstances occur, the only way to properly tackle them is to simply have emergency funds saved up.
An emergency fund is a fund that is in a bank account that is meant for the purpose of covering sudden large expenses. The following are some of the expenses that an emergency fund can help with:
- Unforeseen medical expenses.
- Home-appliance repair or replacement.
- Major car fixes.
Why do I need an Emergency Fund?
If you have heard the words “saving for a rainy day,” then you already know one of the most important uses or benefits of having emergency funds. The use of an emergency fund is to simply keep you afloat in times of great need so that you do not have to rely on credit cards or loans that might put you into debt. Also, having an emergency fund can save you from borrowing to pay debts.
People owing debts usually dig bigger graves for themselves because they keep on borrowing money to pay off the ones they already own. This problem can easily be solved by having an emergency fund tucked away somewhere that you can rely on to dig yourself out of a hole.
How much should I have in an Emergency Fund?
The amount of money that you can save in your emergency funds is totally up to you and is directly linked to your living expenses or standard of living. There is no amount of money that will be enough for you to save in your emergency fund. However, there is a general rule of thumb, which is that you need to save at least 6 months’ worth of living expenses in your emergency fund.
Where do I put my Emergency Fund?
You can basically save your emergency fund at home, but it is never advised to do so. That being said, there are basically two types of places that you can use for keeping or saving your emergency fund. These places are listed and explained below.
- Savings account with a high-interest rate and easy access. So it is important to have your phones in a service account where they generate profit and you can access them early.
- A high-yield savings account is one of the best places to keep your emergency fund. This is because not only do they offer a higher interest rate on your savings but they are also insured for up to 250 thousand dollars.
How do I build an Emergency Fund?
The only way to get emergency funds is to simply build it. And building an emergency fund is not a difficult process; it just needs consistency. If you are interested in building a Manchester phone, below are some of the ways you can use it to do so:
- Calculate how much you want to save. The first step towards building an EF is to know how much you want to save so that you can work towards saving it.
- Choose a monthly saving goal: You must determine how much money you need to save each month in order to realize the amount of money in your EF.
- Channel money from your task refunds into your emergency funds.
- Move the money you are saving into your account immediately.
- Always review every few months whether you are saving the right amount of money or simply if your EF amount needs to be increased.
Above are some of the best steps that you can use in building your emergency funds, which will help you in case of an emergency expense. Pay good attention to the last step, which involves assessing your savings strategy to see if it is working or not every few months.
Which fund is best for emergencies?
In the process of saving for your EF, they are setting the phones that are best for doing so, and some of them are listed below:
- An online savings account
- Money market account.
- No-penalty CDs
- Treasury Bills and Savings Bonds
- Mutual Funds and others.
Is $30k enough for an emergency fund?
30,000 dollars can certainly be enough as an EF, which is very much recommended by many experts. However, for a good EF, I recommend that you save at least 6 months of your living expenses. That is, having money saves you the cash you can use for up to six months without borrowing. That is what can be considered an emergency fund.