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Emergency Funds
Establishing an emergency fund is a powerful money move to protect yourself from financial stress and the additional cost of taking on debt.
Why Emergency Savings Matters
Money in the bank gives you a safety net to pay for unplanned expenses like surprise medical bills, a flat tire, or a broken cell phone. The associated peace of mind is priceless, especially for caregivers who already face higher levels of stress and uncertainty.
How Much to Save for Emergencies
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 living expenses. Use this calculator below to figure out how much you need to save.
How to Build an Emergency Fund
- Pay yourself first. Establish an automatic transfer to set aside money each month.
- Consider selling unused household items online or through a garage sale.
- If you have earned income, visit the IRS Withholding Estimator to see if you should adjust your withholding to get more money per paycheck.
- Save a portion of your tax refund.
- Explore the possibility of a one-month deferral on your auto loan payment. Ask your lender about fees or additional interest charges associated with a deferral.
- Immediately work to replenish your emergency fund if you need to draw from it to cover an unplanned expense.
Where to Keep Your Emergency Fund
- Keep your emergency fund in a safe and easily accessible account.
- Separate your emergency fund from your normal day-to-day checking account to avoid the temptation to spend it.
- Consider an insured savings or money market deposit account so you can earn interest on your emergency fund.
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