About 57 million Americans have no emergency savings. Even worse, for many Americans one unplanned expense could devastate them financially. In the case of sickness, personal emergency or unemployment, it’s crucial to have a backup plan.
By saving three to six months’ worth of expenses in an emergency savings fund, you will always have the peace of mind knowing that you’ll be covered financially in case of an unexpected emergency. Saving takes time and dedication, but starting small now helps in the long run.
Power to Handle Problems Yourself
An emergency fund gives you the power to make important decisions when problems arise to protect your personal finances. This security allows you to pay for unexpected purchases upfront, like a new set of tires or a new hot water heater, instead of putting them on a high rate credit card or borrowing money another way. Though financing an unexpected purchase on a credit card or through a personal loan isn’t bad, an emergency savings gives you the power to decide and make the choice best for you.
Have Access to Your Funds
In case of an emergency, you’ll want to have easy access to your funds. Consider putting your money in a savings account or money market account that you can withdraw from quickly. TruStone Financial has several options to help you save – see them here.
Add Whenever You Can
Finding extra money each month to save can be difficult. Evaluate your budget, make a plan and contribute what you can – even a small amount each month ads up quickly. The most important thing is to find what works best for you. For some that is keeping a jar in their house to collect loose change and for others that’s setting up an automatic transfer to their savings account each month.
Editor’s Note: Segments of this post were taken from NerdWallet and CNBC