Try to remember the last time you had a financial emergency.
Maybe you needed new tires, or a new water heater, or had to travel?Now let me ask you this… how did you pay for that emergency expense?
There usually two answers. Credit cards or an emergency fund!*
What is considered an Emergency?
House or Car repairs
Medical care
Job loss
Moving due to house fire, flood, safety, etc.
Loss of a loved one
The list goes on.
Basically, any expenses that need to be paid which is urgent because it impacts access to food and/or shelter, the ability to work/earn income, and even physical and/or mental well-being.
Focus on dealing with the emergency rather than the "how"
If something comes up, you know you have more options than you would without that money stashed away.
How much is enough?
This depends on each person. Generally, 3-6 months of income or expenses set aside just in case should do. It really depends on what makes you feel more comfortable. Some people would prefer more, and that’s okay! It would be a good idea to stash it somewhere you earn some interest but is easy to access when needed. This is called liquidity.
Peace of Mind
Imagine having 3-6 months worth of income stashed away in case you ever needed it.
Think about how much confidence and reduced stress that would bring you!
Start working on building your emergency fund so you can be more financially prepared for whatever life throws at you!
*For education purposes only. This is not financial, legal or tax advice. Consult the appropriate professional before implementing a strategy to make sure you find the right solution for your specific needs.
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