Life happens. You need surgery… your transmission goes…you lose your job. Enduring those hardships is bad enough, but having them derail your financial future adds insult to injury. Luckily, that’s a situation that can be avoided, if you have an emergency fund.
Preparation is key for financial wellness. Pro Tip: Prepare for the unexpected with an emergency fund. It’s a great idea, and it’s necessary. But how do you make it happen?
Here are some steps to think about:
1. Get all your bills and expenses together to figure out about how much money you spend each month. A general rule of thumb for an emergency fund is to save enough to cover six months' worth of expenses. You don’t need to necessarily replace all your income, just have enough to cover the essentials.
2. Find a place to keep the money; ideally somewhere easily accessible – but not so easy that you’ll make spur-of-the-moment withdrawals.
3. Start saving, but start small. The thought of coming up with thousands of dollars can be overwhelming. Concentrate on getting that first thousand under your belt.
4. Treat funding this account like a monthly bill. Make it part of your budget and pay it every month, just like you do your rent, car payment, or credit cards. Remember, this fund is for unexpected events.
If you follow the steps, building in an emergency fund should become second nature, and you’ll give yourself a pat on the back as you see your financial stockpile add up.
If you have any questions about how to facilitate the creation of an emergency fund, just reach out.