Saving for a rainy day is one of the smartest things you can do for yourself and your family. An emergency fund is a stash of cash set aside for unexpected expenses, like a job loss, a medical emergency, or a major home repair.
The goal is to have enough money saved so you can cover your living expenses for three to six months, giving you a cushion to weather any financial storms that come your way.
Here are some tips to get you started on building your emergency fund:
If you donâ€™t have much saved, donâ€™t let that stop you from starting. Even $50 can get you started on the right track. The important thing is to start somewhere.
Set up automatic transfers
One of the best ways to make sure you stick to your savings plan is to set up automatic transfers from your checking account to your savings account. This way, youâ€™ll never even see the money and youâ€™ll be less tempted to spend it.
Find extra money
Look for ways to free up some extra cash each month so you can put it towards your emergency fund. Maybe you can cut back on your cable bill, or eat out one less time per week. Any little bit helps!
Keep it liquid
When youâ€™re saving for an emergency, you want to make sure you can access your money quickly and easily. Thatâ€™s why itâ€™s important to keep your emergency fund in a liquid account, like a savings account or a money market account.
Saving for an emergency can seem daunting, but itâ€™s important to remember that even small steps in the right direction can make a big difference. By following these tips, youâ€™ll be on your way to a healthy emergency fund in no time.