Preparing for Financial Emergencies
Funding Financial Emergencies
One of the most effective tools for preventing a financial disaster is an emergency fund, an amount of money that is set aside to cover unexpected expenses or to keep you afloat if no regular income is coming in.
Unexpected challenges can come along that threaten your financial stability – losing a job, dealing with an injury or illness or having to help a family member who is in need. If you’re not collecting a paycheck or if you have large, out-of-the-ordinary costs to cover, that can throw your monthly budget completely off track.
The goal is not to touch the money except in a real emergency. If you have it at the ready when you really need it, ideally it will last long enough to get you back on your financial feet.
Putting It Together
To create your emergency fund, multiply your monthly take-home pay times six to find the amount you should ideally save and or a budget calculator may help you to determine how much you can save.
It’s usually not practical or possible to immediately create a fully funded emergency fund. Instead, plan to add to it on a regular basis, in an amount you can reasonably afford, until it reaches your goal value. You might consider adding it as a line item in your monthly budget, just as you do when you put aside a percentage of your income to add to a savings account or your investment portfolio.
Where to Keep Your Money
The whole point of an emergency fund is that you should be able to get your hands on the money quickly and without risking losing money by using those funds–which might be the case if you had to sell off stocks or other investment holdings. If you do have to dip into the fund, it’s important to start building it back up as soon as you have the resources to do so.
Start preparing for an emergency today by opening a Georgia United Savings Account and be ready for the unexpected.
Content provided for informational purposes only and should not be interpreted as legal advice on any subject matter.