Everyone needs an emergency fund that has money for unplanned things that come up and can set you back financially. Unfortunately, a lot of us don’t have one. And that can be a problem because, according to Good Morning America and Rebecca Jarvis, ABC News’ chief business/ economics correspondent, “Life is full of surprises and sometimes they have a giant price tag.”She points out that emergency funds should be for “hurricanes” not just “rainy day” inconveniences like car repairs or broken phones. So how much should you have in your emergency fund? Enough to cover groceries, rent or mortgage payments, utilities and insurance, ideally for six months, but if you can’t get there at first, start with a smaller number, like $500. From there, build your way up six months worth of these expenses.
Expert advice on emergency funds:
Even though it’s a last resort, that money should be available at a moment’s notice, Jarvis says. Savings accounts, money market funds, CDs, 401(k)s or even IRAs are good options, but some charge fees for early withdrawals.
Make contributing to your emergency fund part of your budget by giving a little every week or month until you build up to those six months of savings.
If you’re carrying a lot of debt, Jarvis recommends building up your emergency fund before anything else, even if it means scaling back on debt payments. Kimberly Palmer, a personal finance expert at NerdWallet, agrees, explaining, “Having that emergency savings fund can help prevent you from accruing even more debt if you face an unexpected emergency.”
Once you get some emergency savings, make sure you only use it for true emergencies. “Here’s a good barometer: Consider whether you actually need something to survive,” Jarvis says. “If you don’t, it’s not an emergency.”
Source: Good Morning America
LauRen Merola Strager is a former NFL & NBA cheerleader turned radio host. LauRen is a former Miss Pennsylvania USA and is a proud wife and mother of two. She is the owner and chief editor for her fashion and lifestyle Blog “All Of The F-Words” and is a champion for the Autism community. You can read all about LauRen’s thoughts on motherhood, pageant life, and everyday life through her online content.
