Do you have an emergency fund? If you don’t currently have an emergency fund that you regularly contribute to, perhaps it’s time to reconsider this idea. Financial health is sometimes a major burden and stressor in our lives, and when a financial emergency develops, we are often stuck without a safety net. From emergency hospital visits to car troubles, there are a lot of things in our normal lives that can dip into our finances without warning. Starting an adequately funded emergency fund is a great way to be financially safe in the event that an expensive emergency occurs.
With a high number of jobs disappearing and people out of work, starting an emergency fund is a great safety net. A good starting point is saving up to 3 months of expenses to help secure your financial future in the event of a financial catastrophe. If you want to take it one step further, consider setting aside six months of money in your emergency fund especially if you think your job is in jeopardy. Below are a few other tips on how to start an emergency fund:
- Set a number that is doable and possible! It’s important to factor in your normal spend when deciding on the best amount to save each month.
- Make an emergency fund a long-term goal.
- Factor saving into your expenses. Make your emergency fund a priority as you would a bill.
- Make your money hard to get to! Look for an interest bearing account with minimum balance or fees. The harder it is to get to your emergency fund, the less likely it is that you will spend it for non-emergencies.
If you’re looking for financial guidance and more in-depth information on starting an emergency fund, contact the premier CPA in Hawaii, choose Michael J. Yuda CPA, LLC.