Adulting 101:
The Importance of Emergency Fund
The amount of money that is put into your emergency saving fund will vary depending on income, lifestyle, and monthly cost. At least 3 to 6 months’ worth of expenses should be saved and put away in a high-yeild savings account.
Emergency expenses examples:
Car and home repairs
Unexpected car repairs such as flat tires or needing a new refrigerator can be expensive.
Job loss
An emergency fund can help you pay for rent, mortgage, utilities, etc.
Medical emergencies
If you all of a sudden need to go to the hospital or need emergency dental care that can not be put off you could make money from your emergency fund to pay for it.
Family emergencies
Unexpected travel
Moving expenses
A savings account is different from an emergency fund because an emergency fund is only used in cases of true emergencies. Things that you would use your savings accounts for would be an upcoming vacation, a new phone, or new shoes. Ways to start saving for your emergency fund include cutting unnecessary expenses, tax refunds, side hustles, saving your pocket change, and or adjusting your current budget.
Tax Refund
With the extra money you get back in your tax refund you can put towards your emergency fund.
Cutting Unnecessary Expences
Cutting back on extra things that you don’t need will allow you to have more cash.
Side Hustle
Having a side hustle that you can earn money from will allow you to have extra cash that you can put towards your emergency fund.
Saving Pocket Change
Start saving your pocket change in a jar you will see how quickly all that loose change can add up.
Adjusting Current Budget
If your current budget doesn’t allow you to put enough money in your emergency fund then should look at adjusting your current budget.
What is a high-yeild savings account?
A high-yield savings account is the best place to keep your emergency fund. High-yield savings account are known for helping people grow their money faster. The interest rates on a high-yield savings account can be 25% times high than traditional savings accounts. The key things to look for when opening a high-yield savings account are minimum balance requirements, account fees, and interest rates.