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Starting Your Emergency Fund

Starting Your Emergency Fund

No matter how much we prepare for potential setbacks, the unexpected can always happen. Your car can break down, your roof could start leaking, or you could be facing unemployment.

If you think about your financial picture, do you have enough to cover any unforeseen costs? That’s where an emergency fund comes in.

What is an emergency fund?

An emergency fund is an amount of money that you have set aside just in case something financially unexpected occurs. You’ll want to be able to access this money quickly when you need it, so consider opening a separate liquid savings account. That way, you can withdraw or transfer funds when you need them.

It’s a good idea to have about three to six months of living expenses in an emergency fund. You’ll want to be able to cover rent or mortgage, utilities, transportation, food, insurance and any other regular expenses you may have.

How do I start?

The idea of coming up with three months of expenses may seem daunting, but it doesn’t have to be! Any amount you can contribute is a good start, even if you can only save $20 dollars a week.

Here are a few quick tips that can help you get started:
  • Set a monthly savings goal. Making a goal for yourself helps manage your expectations. Sit down and figure out what your expenses are, where you can cut back, and how much you can reasonably afford to put away.
  • Make it automatic. By setting up automatic transfers to your savings account, you’ll start saving without even thinking about it.
  • Save your savings. If you brew your own coffee in the morning instead of stopping at your local shop, it may seem easier to spend that money you saved on something like take out lunch. Instead of spending those savings, no matter how small they may seem, put them into your emergency fund.
Regardless of how you choose to build your emergency fund, the most important thing is that you start. You’ll have peace of mind knowing that you’re helping yourself later!
For information on savings accounts, different options for depositing money to your emergency fund and more, visit our website!
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