If you were suddenly faced with a financial emergency of at least $1,000, would you be able to pay for it? Or would you have to go into debt?
If you couldn’t afford it, you’re in the majority of Americans right now who don’t have an emergency fund.
According to Bankrate, only 39 percent of Americans said they would be able to cover a $1,000 setback with their savings.
Having a healthy and fully funded emergency fund means peace of mind. FOX 46 is getting results for you by helping you protect yourself and your family and build an emergency fund in 2019.
We’ve partnered with Tenley Desjardins of Consolidated Planning to walk us through the key points of building an emergency fund. First, she says, it’s important to understand what an emergency fund is: a set amount of cash that is easily accessible in case of emergencies.
How much and how you fund is up to you, Tenley says, so make it easy on yourself and start small. “Start with $25 a week or twice a month and put it into a separate savings account.” Make it even easier by automating these deposits so that you never see the cash and therefore don’t miss it. It will add up quickly.
The right amount, says Tenley, is whatever brings you peace of mind. But a good place to start is at least three to six months of living expenses. “Think about what you would need to float yourselves for a little while,” in case you get laid off or can’t work. Once you save enough for three to six months, it’s a great idea to keep saving until you have a year’s worth of funds.
The next part is super important to keep from derailing your good intentions: keep the money in a high yield savings account that is not attached to your checking account. “You don’t want to create a habit of dipping back and forth,” Tenley says. Otherwise your emergency fund will quickly be depleted.
Right now is a great time to choose a high yield savings account with a competitive interest rate.
Before you know it, your emergency fund will be growing, giving you priceless financial peace of mind.