Will your emergency fund meet your needs? What is an emergency? Do you have enough saved? Can you access it when you need it? How do you determine How much you will need to set aside to feel that your financial needs will be met if an emergency comes along? First we can discuss what an emergency fund actually is!
Will Your Emergency Fund Meet Your Needs?
Definition of an emergency fund: Money sitting in a savings account at a bank or credit union in accounts that are insulated from the ups and downs of the stock and bond markets. They are easily accessible online. Interest rates are pitiful on these accounts, but the emphasis is on safety over returns. In other words you can count on the money being there when you need it. It is there to help you during your emergency!
Most experts suggest you should have the equivalent of 6 months salary. If you cut back on expenses to the bare minimum, and you have 6 months salary saved, it will actually last you more than 6 months. This type of emergency fund is for a job loss and will help you survive while looking for another job.
Our experts also suggest you look into the details a little more before finalizing the amount. For example how long will it realistically take you to find a job? If it is longer than 6 months then you better save more!
Are their major repairs or some other kind of emergency you need to plan for. Does your car need repair? What about the house? How about health issues? These are all things that an emergency fund might be able to help you with.
Take a look at your life and see what emergencies you should plan for! Don’t forget to top up your fund if you need to draw on it . You want it to have sufficient funds for the next time!