10 Things You Need to Know Before Building an Emergency Fund
Emergencies can strike anybody and any household pretty much any time of the year. While you may not want to plan for emergencies, and sometimes closing your eyes and hoping they don’t happen can seem like your best bet, it’s usually not the right way to protect yourself.
But if you’re like many people, you’re not quite sure what you should be doing to keep your home and your family safe.
Having an Emergency Fund Is Indispensible There are lots of options for homeowners and even renters out there, ranging from homeowner’s and renter's insurance to life insurance policies that will leave money for your family if anything should happen to you. These are often a good idea, especially for people who have families with only one provider, at least in terms of monthly income.
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However, having an emergency fund can also be quite beneficial for everybody out there. The reason an emergency fund is so important is that you never know what’s going to happen or when, and you don’t know that your insurance will cover it. In some cases, there are definitely things your insurance won’t cover, and these do come up for somebody on an almost daily basis.
10 Crucial Tips to Build Your Emergency Fund Before you start building your emergency fund there are some things you need to consider if you want to do it wisely.
Use these tips to help you make sure that you and your family are protected when everything is just going wrong.
Figure out Your Monthly Expenses Figure out how much you can take out of your paycheck and still live comfortably. You might have to skip the premium cable channels or limit your nights going out, but that’s definitely worth it if you’re building an emergency fund to protect your family.
Simply putting away 5% of your paycheck each month can make a huge difference and really add up to a lot of cash quickly.
Put Aside Money in a Basic Savings Account Put that money in a basic savings account each month. Savings accounts may not offer a high yield, but you can access your money at any point without a penalty in most cases.
Just make sure you have access to all of your money when you demand it. That’s the whole point of using this type of savings account as an emergency fund.
Invest in IRA Invest extra money in a growth account like a Roth IRA with a low penalty rate for pulling money out. You’ll get a better return on your money than a savings account, but you won’t get hit with big fees for taking your money.
Just make sure you can get it in a timely fashion – within 60 days of your request, for example.
Save Some for Your Kids Put money aside for your kids. You may not be around forever, and even if that’s grim, you want them to do well, even without you.
Automate Your Checking Account Think about setting up automatic deposits from your main checking account. That way you can save money without having to think about it.
Use Creativity to Save Money Get creative with your money. Could you save more to go into an emergency fund by buying food in bulk? It’s worth taking the time and energy to protect your family.
Find More Investment Options Invest some money. Other than IRAs, real investments can help you generate more savings. Just know that some risk is involved.
Buy Property Property is a long-term investment, but you should be able to sell within 6-months in serious emergencies.
Keep a Fixed Amount of Cash Keep some cash around the house. It might sound crazy, but even $200 tucked away can help in serious emergencies. You never know what’s going to happen, and you may need some cash, in the event that ATMs are down in your area. Paper checks aren’t always accepted these days, especially at smaller markets and stores.
Pay Your Debts with Payday Loans Know that payday loans are out there. In some cases, pulling money out of a 401k or other type of account could be much worse than a little short-term interest. If you need money to get back on your feet, keep the lights on or keep the rent paid, a payday loan can be particularly beneficial.
Best of all, you can get a payday loan in just a few hours in most cases.
If you need to pay your debts or need cash in an emergency – Cash One can help you get online payday loans in 1 hour!
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