Published to Newsletter on Jan 05, 2022
Anyone who has been through unexpected financial emergencies like a job loss, major car repair, or water heater replacement knows it can feel very challenging without an emergency fund as a safety net.
Most financial experts recommend having up to three to six months of living expenses saved and replenishing the fund after using it for an unexpected expense. But there are reasons you may want to set aside even more.
What if you don’t have a fund yet, or it’s not big enough? You’re not alone. A recent Bankrate survey
indicates more than half of us living in the U.S. need to save more. Even in tough times like a pandemic, it’s essential to take good financial care of yourself and your family.
An important first step in determining how big your fund should be is to add up all your living expenses and multiply this times three or up to six months. Track your spending with a budget app or tool and decide what extras you can do without to create a monthly contribution to your emergency fund.
Automatic transfers from your paycheck to a separate account that cannot be accessed with your debit card can make it easier to stick with your goal and avoid using the fund for non-emergency expenses.
Do you normally get a tax refund? Consider putting it aside instead of planning to spend it. Even if you are paying off debt, and many of us are, include your emergency fund savings in your strategy.
Start with a monthly savings goal you can achieve. Even a small amount will grow over time.
For more ideas on how to build your emergency fund, see an essential guide to building an emergency fund.
Tags: EmployeeWellness, Wellness
