Your Emergency Fund: How Much is Enough?
Last week, we shared a blog post on the importance of saving for financial crises. Today, we'll take that post a step further by helping you develop a strategy for enduring the unexpected. Knowing that unfortunate life events are often unavoidable and catch us off-guard, our friends at TrueNorth Wealth Management have graciously prepared an article that addresses how much money is recommended to place toward an emergency fund.
How much money should I save?
When starting an emergency fund, TN Wealth recommends setting a target amount. This number can vary from family to family. Consider what the funds may go toward and budget accordingly. Often, people should consider how many dependents rely on the family income and also take into consideration the monthly bills that come in each month.
Where should I begin?
If saving several months of income seems unreasonable, start with a more modest target - such as saving $1,000. TN Wealth suggests building your savings at regular intervals and to treat the transaction like a bill you pay each month - automatic deposit may also be something to consider if you feel tempted to spend.
As you begin to see the savings build, TN Wealth warns that you may feel tempted to spend it on something other than an emergency. This is why they encourage you to keep these funds separate from your checking account.
How do I keep the funds accessible?
Emergency funds should be easily accessible, which is why many opt to save emergency funds in traditional bank savings accounts. For more information on other investment options for your emergency funds, consult the TN Wealth article here.
TrueNorth Can Help
Unexpected expenses are inevitable for anyone, regardless of family size or income bracket. Having an emergency fund will help alleviate the stress and worry often associated with financial crises. For more information and financial guidance, please call TrueNorth at 1-800-798-4080 or visit the Financial Services section of our TrueNorth website. Our financial advisors would be happy to schedule a consultation with you and your loved ones to make sure the things that matter most are protected and accounted for.