What is an Emergency Fund?
An emergency fund is a separate savings or bank account used to cover or offset the expense of an unexpected situation. It serves as a safety net, only to be used when financial crises occur. An emergency fund can help pay for large, unexpected expenses,
such as:
- Medical expenses
- Home repairs
- Car repairs
- Living expenses from unemployment
How Much Should I Save?
While how much you save depends on your lifestyle, monthly costs, income and family needs, a general rule is to set aside at least three to six months’ worth of expenses. While this may seem intimidating, the idea is to put a small amount away each
week or two to build up to your goal. You can adjust the amount as needed based on your bills, job stability or other factors.
Five Steps to Building an Emergency Savings
Are you prepared for the worst-case scenario? If your pipes burst, or you have unexpected medical costs, find yourself out of work, total your car, or urgently need to purchase a plane ticket – will your savings cover the cost?
If not, you may want to think about building an emergency savings account. An emergency savings account is a special pot of savings – separate from retirement savings – that’s set aside to cover unforeseen and unexpected costs.
Like any savings category, it’s never too late to begin building up your emergency fund. The important thing is to start – even starting small is a step in the right direction. To help you build your financial shelter, we’ve pulled together five steps that will help you find a safe harbor in rough seas.
5 Helpful Steps:
Step 1: Set a goal, create a plan
Step 2: Save Automatically
Step 3: Save Gifts, Refunds, and Spare Change
Step 4: Monitor and Adjust
Step 5: What’s next?
Where Should I Keep My Emergency Fund?
Emergency savings should be placed in an account that is easily accessible without taxes or penalties, such as a money market or interest-earning savings account.
Ready to start saving? Our bankers are here to walk you through the process. Call to schedule an appointment with a banker or open a savings account online.