Financial Directory

Create an Emergency Savings Fund

Everybody needs an emergency savings fund.  Money experts recommend that you have a securely placed emergency savings fund to cover eight months of living expenses.  Prepare for disaster by not using debt to cover emergencies is a good financial goal.  Here are tips to help you build up your money for a rainy-day.

• Begin Saving Now:  The earlier you start saving your money, the more money you will have.  Set aside money toward your emergency savings fund to create a risk-free safety net for your family.  A little contribution is better than nothing. 

• Make It Automate:  Have a set amount of money withdrawn automatically from your paycheck and deposited into a separate savings account.  Once you made the commitment, you will scale back your spending accordingly to make ends meet.

• Stash the Fund in a Safe Place.  Verify that your emergency savings fund is in an institution that is covered by the Federal Deposit Insurance Corporation (FDIC) or a credit union that is a member of the National Credit Union Administration (NCUA).  You want this money to be in a safe place.  Put your nest egg in a money market or savings account, CD, or T-bill and not in a stock market.

• Build Your Savings:  It may take some months or even a few years to accumulate money for eight months’ worth of living expenses as a safety net in the event of emergency that leads to a loss of income.  The more you save, the better off you will be.

• Save, Save, Save:  The way to have extra money is by spending less each month or doing extra work on the side to earn some more cash.  Cut back or eliminate the impulse buying.  Financial security may mean making small sacrifice, but it will make a significant difference later for you and your family.

• Live Below Your Means:  Resolve now to live below your means and maintain a positive cash flow.  Track every purchase that is a want (not a need) then find a way to reduce or eliminate it.  Establish a budget so you can start saving now.