Do I Need an Emergency Fund?

Woman Putting Coin In Piggy Bank

An emergency fund is something you always want to have but never want to use. Think of it as an account dedicated to unexpected costs, including:

  • Major Auto Repair
  • Job Loss
  • Large Medical Bills

Such costs can strike from nowhere, and it’s vital that you have an emergency fund to help you meet them. Here’s everything you need to know.

Why You Need an Emergency Fund

Even if you’ve got a handle on your day-to-day living expenses, you could be blindsided by something unexpected. Maybe your car will be involved in a collision, or perhaps you’ll have a month or two off of work. In either case, you’ll need an emergency fund to stay afloat without having to rely on credit cards or high-interest loans. You’ll also avoid having to dip into your other savings.

How Much Should You Save & Where Should You Save It?

How much you save is going to depend on your own financial circumstances and living situation, but it’s a good rule of thumb to save enough to cover three to six months of living expenses. That might sound like a lot, but you can always start small and build up — even a $500 emergency fund can help you avoid many financial scrapes.Put that money in a separate account so you aren’t tempted to dip into it — you should choose somewhere that it can be quickly and easily accessed. A high-yield savings account is often the best option. You’ll earn interest on what’s in there and get to access it quickly through withdrawal or transfer when you need cash most.

How to Build Your Emergency Savings

Now you know what an emergency fund is and how to set one up, you should follow these money saving strategies to get one together:

  • Set a monthly savings goal
  • Save your change and put it in each month
  • Temporarily cut down on unnecessary expenses
  • Save your tax refund
  • Use a money saving app

Turn to Xpress Cash for Fast Financial Assistance

If your current emergency fund isn’t quite up to scratch, you can always take out a personal loan from Xpress Cash. We have locations in Idaho, Wisconsin, and Michigan, so contact us today for any help or advice.