Why Save for Emergencies?
See why it’s so important to make an emergency savings account part of your budgeting and financial health.
When faced with a financial crisis, having savings set aside can keep you from going into high-interest debt. If you’re already managing debt, creating an emergency savings account is still important as it can help prevent you from going further into debt.
Remember that your emergency savings is for emergencies only, which means unexpected events you can’t control. Most true emergencies will fall under one of the following categories:
How Much to Save
The general rule is to save three to six months’ worth of living expenses. When calculating this number, include only the necessities such as your rent or mortgage payment, grocery store costs, utility bills, insurance payments, loan payments and basic toiletries.
If that seems like an insurmountable figure, remember that any amount in emergency savings is better than nothing. Even just a couple hundred dollars can make the difference when trying to manage an unplanned bill.