It’s a general rule of thumb that you should set aside money in case of an emergency. It’s up to you to decide when you’re having an emergency and need to access the funds but consider these situations.
- Your car breaks down unexpectedly. Using emergency fund money will help you avoid using a credit card or taking out a loan.
- You lose your job. This is a true emergency. Your savings should help tide you over while you search for another job.
- You get sick. Money set aside can be used for unexpected medical bills. Paying for it outright saves you interest costs of a payment plan.
- Your roof leaks. If you own a home, your emergency savings can come in handy for unexpected repairs.
Make it happen:
Ask your bank or credit union to automatically transfer funds each month to your savings account. Even as little as $10 or $15 helps! Collect all your loose change and put it in this account, too!