Your income may not always be enough to cover unexpected expenses. It’s important to save money today so it’s available when you need it.
Setting aside money for short-term needs and emergencies is one of the most important financial moves you can make.
Life has a way of throwing curveballs from time-to-time—be prepared for these expenses with an emergency fund.
An emergency fund is money you set aside to cover unplanned expenses that come your way. It provides a safety net for your finances and protects your peace of mind.
There are potentially hundreds of reasons to have an emergency fund. A few examples include: a costly emergency visit to the doctor or vet, a broken cell phone, or an unexpected trip back home. Without money set aside to pay for these emergencies, you might have to turn to using credit and incurring a larger cost in the long run.
Financial experts recommend setting aside at least $1,000 for emergencies and adding to it until you’ve saved three to six months’ worth of your fixed living expenses.
It’s important to keep your emergency fund in a safe and easily accessible account that does not apply fees to transfer funds. Bank savings or money market deposit accounts are good options.
The military’s Savings Deposit Program is available to uniformed Service members deployed to a combat zone and pays an annual return of 10%, compounded quarterly, up to $10,000 in savings.