Doesnt it always seem like when everything is starting to go your way, something breaks down? You start to get your feet back under you and then something knocks you down again. When it happens, it always costs you money.
An emergency fund can save you and your budget from disaster. Think about how the little emergencies affect your monthly budget. That $300 repair bill on your vehicle, a new $600 refrigerator, an unexpected trip out of town -- each one can hurt your ability to pay your bills if you are on a tight leash financially.
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The emergency fund can be used for the unplanned expenses that can not be handled by your regular budget. This fund can be used when the refrigerator
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NMFA Budgeting for Baby::
Plan for unexpected expenses: Use any savings in your new budget to begin building an emergency fund of three to six months’ living expenses.
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Think about what a larger emergency would do to you financially. What if you lost your job, became ill or disabled? What if you couldnt work for several months? What if your child became ill and you had large medical bills to face? What about major home repairs or a new engine in a vehicle?
Without an emergency fund, you could be forced to use a credit card. While this is an option that you may have to fall back on, it will take you years to pay it off and will cost you thousands in interest. Plus, you dont want to purchase daily items, such as groceries and gasoline, on your credit card. If you dont pay it back at the end of the month, you could pay for those groceries for the next three years.
If you have an emergency fund, you are able to survive an emergency with your finances in tact. Yes, you spend what you saved, but that is what it is there for.
CIBC - Smart Money - Are You Financially Fit?::
If you're looking at your budget and thinking, "There's just no way! Ideally, your emergency fund should be able to support you for three to six months.
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A COLLEGE STUDENT BUDGET::
File Format: PDF/Adobe Acrobat - View as HTMLOther fixed expenses, such an emergency fund and other savings. .. Protect Your Child’s Privacy:. Call 1-888-466-6936 for facts every concerned parent
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Ideally, you should have three to six months worth of living expenses in your savings. Just start and keep working your way up. Personally, I dont believe that you can have too much in your emergency savings account. Or too little. So dont hold off because you dont have a lot to put back right now. Every penny will help in an emergency.
Keep your emergency savings in a separate account from your regular savings or checking. We keep ours in a different bank. This eliminates the temptation to withdraw some money for something we dont need. Keeping it separate makes it easier to forget about it until you need it.
The ideal account is one that is easy to withdraw from in an emergency. You should consider a savings account or a money market account. They wont offer you great interest, but they are very liquid and easy to get to.
An emergency fund not only lightens the burden to your finances, it also benefits you emotionally. Financial issues can cause a lot of stress and worry -- which are the last things you need on your plate in an emergency. Knowing that the finances are taken care of can help you deal with the situation in a positive manner. I cannot stress how vital emergency savings are. They really do protect you and your budget from emergencies.
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Protect your Budget With an Emergency Fund