All you need to know about building an emergency fund
Image source: cnbc.com
Image source: nbcnews.com
A number of circumstances can shake your finances. An emergency fund must exist in your life so as to help you get back on your feet should you meet any sickness, accident, or job loss.
Many financial experts suggest for an individual to have an emergency fund that maintains three months’ worth of the person’s salary, while others recommend the amount to at least be six months’ worth. Building an emergency fund is no easy feat. You have to be patient and persistent in making it happen. It’s best to follow the “pay yourself first” approach according to Steven Sorensen. This kind of saving attitude treats your emergency fund like a utility bill which you can’t refuse to pay.
To get you started, decide on the amount you want to save for. This enables you to create a budget that leaves a space for your emergency fund and other savings. Once you have that down, open a savings account separate from your checking so you won’t have an idea how much money is saved into the account unless you check with your bank.
To maximize your savings efforts, be creative with the way you save. Steve Sorensen suggests that you automatically deposit money you are not expecting to receive. This could mean work bonuses, gift from friends, or bills and coins you find at home that you’ve totally forgotten about. Don’t get discouraged if at first your emergency fund isn’t growing as you want it to be. Keep saving and pushing until you build one that can save you from the uncertain.