Do I Need an Emergency Fund?
By: Stephen Helliwell
Certified CU Financial Counselor
Whether it’s your transmission that goes out, an unexpected medical bill or you find your hot water heater leaking all over the place – everyone encounters an unexpected expense from time to time. Not many folks plan ahead for these situations, so the biggest challenge is trying to come up with the required funds to resolve these issues. Nobody wants to go into further debt so having funds readily available for these situations would be optimal.
This is when having an Emergency Fund could be very beneficial. It is a separate savings account that should only be accessed when emergency situations arise. Having this account available is a fantastic way to help you sleep better at night. It turns an unexpected crisis into a minor inconvenience by providing a protective barrier over your finances.
Unfortunately, most people dislike dealing with their finances but they are usually aware of the monthly expenses they are responsible for. It feels great when all these costs are covered and there is still money left over that can be used at one’s own discretion. When unexpected costs arise, people start getting really stressed as they realize their income just barely covers their monthly expenses. What can they do to create a more stable and dependable budget?
You might consider opening an emergency fund where people are recommended to save three to six months’ worth of their monthly expenses. This is in addition to one’s savings account and provides folks with a reliable financial cushion. The first thing people should do is create a monthly budget and determine how much they can afford to save on a monthly basis. You should start out small and work your way towards a comfortable yet consistent amount.
Please call or come into the Vocality Community Credit Union today to set up an appointment where we can assist you with establishing your personal budget and emergency fund.