As we all know, life can throw us a curve-ball at any point in time. Unfortunately, most of the time it’s when we least expect it. That’s why we should be prepared for the worst. One way to make sure you are prepared, is with what we call a safety net. This is the cushion you have to fall back on during those times. In other words, you may call it your emergency fund.
What is an emergency fund?
An emergency fund is money you set aside for those curve-balls that get thrown at us. This can be things like a car repair, medical bills, home repair, job loss, etc. And no, that new car or purse you want or vacation you want to go on is NOT an emergency. We know it’s hard not to splurge on these types of things but don’t do it! Having a safety net is so important.
Why should I use an emergency fund?
The reason for this is simple. You never know when or what life will throw at you. We don’t like to think about bad things happening to us but it’s better to be prepared than not at all. This will save you large amounts of financial stress.
How much should I have in my emergency fund?
This all depends on your income. Each month, we suggest pulling a certain amount of money from each paycheck and putting it in your emergency fund. Whether it be $20, $50, $100, anything helps. You will be surprised at how it adds up! This also depends on how many people you provide for and how many incomes you’re working with. If you’re married and both you and your husband work, then a three-month emergency fund is probably fine for you. If you’re working with one income, you may want to consider a six-month emergency fund.
Where should I keep this emergency fund?
Don’t keep it in the same place as your regular funds. Open a savings account and do not touch it unless it’s an emergency! It can be tempting to pull from this account, so you may want to open your account at a completely different bank than the one you usually use.
We encourage you to start your emergency fund today. You will be doing yourself a huge favor, one that saves you loads of stress. Imagine the feeling of having no debt and being in complete control. And when you do come across an emergency, you will be fully prepared. Your emergencies won’t feel so big after all! Let’s do 2020 different than 2019 and be more in control. Be prepared and start building your safety net! Stay up to date with news and blogs from Eastex for more helpful information in the future.