GREENSBORO, N.C. — Whether it’s caused by inflation, unemployment, or illness, having an emergency fund can soften the economic blows of your life. And, as Consumer Reports explains, getting started may not be as hard as you think.
With any luck, it’s working now. You have a steady salary, pay your bills on time, and even have a little extra money left over.
But what if the unexpected happens? We all experience financial emergencies like major home repairs, medical bills, and even loss of income.
“Having an emergency fund to cover these types of unplanned expenses can protect you from large debts that can easily turn into a financial crisis,” said Lisa Gill of Consumer Reports. You can,’ he said.
Many financial planners say a good rule of thumb is to set aside enough money to cover essential expenses for three to six months.
“This is for housing, food, transportation, and debt repayment. Do the math,” said Nestor Vargas. , Certified Financial Planner.
How much money should I put in each month?
Once you’ve set your savings goals, don’t let the numbers fool you. It is definitely important to start saving as much as possible. Whether it’s $5 or $10 a month, you’ll be amazed at how quickly it adds up.
With our online savings calculator, you’ll know how much you’ll need to save each month to reach your goals, and how quickly that money will grow.
Consumer Reports suggests putting that money in a high-yield savings bank or penalty-free certificate of deposit. Many of these accounts currently have interest rates in excess of 4%.
Tips to save money for sure
Make saving even easier by setting up automatic deposits or transfers from your checking account to your emergency fund. Track your contributions and keep them safe until you need them.
Building emergency savings should be at the top of your list, but you may have other urgent financial obligations, such as high-interest credit card debt. If so, paying off that debt should be your top priority. If you have low-interest debt, you can use some of your savings to pay off and the rest to an emergency fund to balance it out. For more information about paying off credit card debt, visit CR.org.