Today I’d like to talk about the importance of having an emergency fund.
An emergency fund is a special fund into which money is deposited on a regular basis. this money is intended to be used in the event of an emergency only. If you have a regular paycheck, a given amount determined by you is put into that fund on a regular basis.
With no emergency fun, a person or family would have to get along with out the car, or put repairs on a credit card. While this make take care of the immediate problem, that bill will still have to be paid. the more months you have a balance on a credit card, the more you pay in interest.
How do you get an emergency fund? each time you get paid, you put money from your check into a separate account for emergencies.
If you aren’t getting a paycheck on a regular basis, you can cut back in other ways to make it possible for you to have an emergency fund. For example, instead of eating out, put that money into your fund. Watch movies at home instead of going to the theater. Put the ticket and popcorn money into your fund.
How much should I have in my emergency fund? Experts recommend that there be enough money to support you for 3-6 months in your emergency fund. so, if you make $3,000 a month, you should have between $12,000 and $18,000 in your fund. then if you lose your job, you will have the money to live for a few months if it takes a while to find a job.
When deciding if it is an emergency or not, focus on need rather than want. If your food will spoil without a refrigerator, vs. you want a new refrigerator but yours works fine, the first is the emergency. focus on the needs rather than the wants. It will help you make better decisions.
Connie David is a Money Guide. She helps people find ways to keep more of their hard-earned money.For more information: Click Here
categories: Savings,Fund,Investment,Health,Emergency,Money