Four Things to Consider As You Develop an Emergency Savings Plan
Establishing emergency savings should be part of any financial plan, both now and in the future. Whether it’s due to job loss, unexpected emergency or economic events that are out of your control, it’s important to have money on hand for better peace of mind. This is especially important as we all navigate a landscape changed by the pandemic.
SET GOALS
OPEN ACCOUNT
REVIEW EXPENSES
START SAVING
Here are four things to help you create an emergency savings plan:
Set a savings goal.
Having a specific goal for your savings account can help you stay motivated. This fund should contain between three to 12 months’ worth of living expenses.
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However, don’t panic if saving up to 12 months’ worth of expenses seems impossible. The important thing is to start saving something. Emergency funds don’t grow overnight, but as long as they grow, that’s all that matters.
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Having a specific goal for your savings account can help you stay motivated. This fund should contain between three to 12 months’ worth of living expenses.
However, don’t panic if saving up to 12 months’ worth of expenses seems impossible. The important thing is to start saving something. Emergency funds don’t grow overnight, but as long as they grow, that’s all that matters.
Open an emergency
savings account.
Once you have a plan for how much to save for emergencies, it’s important to consider where you’ll keep your savings. Ideally, your funds should be in an
account that’s easily accessible and that earns some interest.
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For example, high-yield savings accounts are a good option as they can offer competitive rates and fewer to no fees.
Once you have a plan for how much to save for emergencies, it’s important to consider where you’ll keep your savings. Ideally, your funds should be in an account that’s easily accessible and that earns some interest.
For example, high-yield savings accounts are a good option as they
can offer competitive rates and fewer to no fees.
Review and reallocate
your expenses.
For example, if you learned to give yourself a haircut or manicure, keep doing that instead of paying someone else again. Then, set that money you would have spent into your emergency fund.
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One way to quickly come up with money for an emergency fund is to look at the expenses you may have reduced or eliminated during COVID-19 and rather than reinstate them, set them aside instead.
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One way to quickly come up with
money for an emergency fund is to look at the expenses you may have reduced or eliminated during COVID-19 and rather than reinstate them, set them aside instead.
For example, if you learned to give yourself a haircut or manicure,
keep doing that instead of paying someone else again. Then, set that money you would have spent into
your emergency fund.
Make consistent contributions.
While there are many ways to save, setting up automatic recurring transfers
to your emergency fund is often one of
the easiest. Aim to make it a specific amount, and if you can occasionally afford to do more, you’ll watch your savings grow even faster.
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