Emergency situations can happen at any time. In terms of your finances, setting aside money in a separate account for unplanned circumstances is essential.
What are some benefits of investing in an emergency savings account?
- Setting aside money can reduce some of the stress associated with unexpected events.
- Creating a safety net for yourself and your family will give you peace of mind to tackle anything life may throw your way.
- It may also help prevent spending money on a whim, something that can happen when people aren’t completely aware of their financial situation.
First, understand what an actual emergency is. For example, an emergency can be defined as medical and dental costs, legal suits, car repairs or property damage.
Having insurance in an emergency is imperative, but it can also add to the expenses in the form of deductibles. Factoring in deductible costs, such as those from property damage or medical expenses, will help determine how much more should be saved each month to cover extenuating circumstances.
Another important factor to consider is how much savings you have now. Are you already saving for future investments, like college or a house? Although saving money is important, having enough to pay monthly expenses on time is essential too. Save smart with an amount set aside each week or month that works for your current situation.
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