Unexpected expenses come in many forms and can quickly get you into debt or push you further into debt. Prepare for these unexpected expenses with an emergency fund.
It never fails, you wake up ready for a normal day when BAM you get a flat tire on the way to work. Your son comes home from school with a toothache. Your husband hurts his back performing his touchdown dance ritual during the big game. The unexpected is expensive.
Unfortunately, there is no way of knowing when unexpected life events will ruin your day, but you can be prepared for them. If you don’t have an emergency fund already set up, you need to start building one now to stay out of debt.
An emergency fund is money saved that is only to be used to pay for unexpected expenses. Since you normally don’t know how much an unexpected life expense will cost, we recommend starting with at least $1,000 in your emergency fund.
If $1,000 seems like a lot right now don’t panic! Small deposits will add up quickly over time. As this fund grows don’t stop! You should try to save three to six months of your living expenses that can only be used in case of emergency.
The easiest way to start an emergency fund is to have a portion of your pay deposited into a separate account or automatically transfer a portion of your pay as soon as it is deposited. Add extra money from gifts, rebates and federal income tax refunds to grow the fund.
Unexpected expenses can happen at any time. So get started building your emergency fund now to help keep you out of debt in the future.