How & Why You Should Start an Emergency Fund | St. Johns Bank
Saving money is important for a healthy financial future, but there are a lot of factors that go into putting money aside every month.
How much should I (or can I) save? Do I need a separate savings account? What am I actually saving for?
Here are a few reasons why an emergency fund is an important part of your financial situation—and the best way to go about beginning an emergency fund.
Why Is an Emergency Fund Important?
There are a plethora of reasons why having money in a savings account is beneficial. An emergency fund can cover unexpected expenses, such as a broken-down vehicle or medical bill. There are so many things that can come up on a daily basis that can cost money that you may, potentially, not have.
If you are currently paying off debt, an emergency fund can prevent you from adding on to your debt load. An unexpected financial blow of any kind can put you further into the hole, if you don’t have money to cover it.
Furthermore, an emergency fund is all about financial security. If you are a single income household, or you are a single person, there may not be another financial source to lean on if you become sick and cannot work or get laid off from a job. Since expenses never stop occurring, it is important to have something to fall back on if your income swiftly changes or ceases.
How to Start an Emergency Fund
It’s true that saving money looks different for everyone, and there are certain guidelines you can follow to ensure you’re staying on track with your financial goals.
A good first step to starting a successful emergency fund is to open a separate savings account. You are more likely to save money and not touch it for unnecessary purposes when it is separated from your primary checking account.
After opening up a savings account for your emergency fund, create a budget for your monthly finances. How much can you dedicate to your savings every month?
This number may change every month, depending on your income. If you’re interested in being more aggressive with your emergency fund, consider creating additional income to put toward your savings account.
A bonus tip: Automate your savings! Taking the brainwork out of saving money can help you save more every month.
To begin your emergency fund and create a solid financial foundation, visit our website to learn more about our savings account options!