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If an emergency situation arises, do you and your family have funds set aside to cover any unforeseen costs? Experts recommend that adults have an emergency fund containing roughly 6 months’ worth of funds for costs ranging from rent to emergency procedures at Northwest Surgery Center. Whether you unexpectedly lose your job or experience a major medical complication, having money to cover any emegerncy costs is important.
If you don’t currently have an emergency fund, here are a few simple tips for building one.
Set a Realistic Goal
While it is recommended to have a few months’ paychecks worth of money in your emergency savings account, the truth is that this amount of money should be built over a fairly long period of time. Trying to save up a few thousand dollars in only a couple of months will require many people to put a majority of each paycheck in savings, which is not realistic and will lead to splurging while little money is actually saved. Being realistic about the amount of money you make each month as well as the amount of money you tend to spend can help you be realistic about how much you can afford to set aside for emergencies.
Automate Your Savings
Take the guesswork out of building your savings account and set up your direct deposit so that a percentage of each paycheck is put directly into your emergency savings account. This will help you ensure that a certain amount of money is being put in your savings each month, so that you can achieve your savings goals without even having to try. Plus, keeping your emergency savings in a separate account will decrease the chances of you using this money for anything else, as it will be kept physically separate from your other funds.
Keep Saving After Reaching Your Goal
After reaching your savings goal, you might be tempted to stop saving money. In order to keep building your savings and to ensure that you are set in the event of an emergency, you should keep adding money to your emergency fund even after reaching the goal you previously set for yourself; however, once your goal has been met, you can begin to add money to the fund in smaller increments.
