Steps to Preparing an Emergency Fund
With all the natural disasters that have happened or are about to happen this month, it makes you pose the question; am I prepared? Everyone needs to save for the unexpected; unfortunately, many individuals and families do not have any savings at all. When you have no savings than any emergency is going to put you in the hole. A financial buffer can help keep you afloat in a time of emergency and let you recover without going into debt. We can all make it there if we follow these simple steps and make a plan.
First, you need to consider this question. How big should my emergency fund be? There is no exact answer because it should be based on your situation. A good rule of thumb is to try to have enough to cover three to six months’ worth of living expenses. But any type of savings is better than nothing. The best thing to do is start small and build your way up. Now let’s go over some simple ways to get your emergency fund started.
Remember an emergency fund is for emergencies. An emergency is something that affects your health or your ability to earn an income. Things that are not emergencies include holidays, birthdays, or lavish purchases. The thing to do is draw a line between savings for emergencies and savings for anything else. Remember to set a realistic goal and start small, and remember even a little adds up over time.
*You may have to pay the other side’s attorney’s fees and costs in the event of a loss.
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