When to Tap into Your Emergency Fund
June 29, 2016
We have all heard it time and time again that we should have an emergency fund set up for those unexpected expenses that arise. About 20% of Americans struggle to stick to a budget, while nearly 13% find saving up an emergency fund to be a challenge according to GoBanking Rate’s 2015 Life + Money survey. While it may be hard to save for an emergency fund, it is one of the most important ways to avoid a financial ruin. So what exactly qualifies as an event worthy of using this fund?
15% of Americans say their biggest financial fear is losing their job according to the same survey. Losing your job is one of the main reasons to have money in an emergency fund. That is what it is there for. If you feel it will take 6-12 months to get a new job and replace your income then you want 6-12 months in your emergency fund to be available for you. Use your emergency fund only to help you ride out the job loss.
You never know when you are going to get sick, break a bone, etc. These trips to the doctor can cost hundreds or even thousands of dollars. Having an emergency fund can help with the high cost of healthcare and the unexpected expenses.
For many people, their car is their only reliable means of getting to and from work. This does not include purchasing a newer, nicer car just because. Tap into the emergency fund for things such as repairs and needed upgrades or maintenance.
Emergency Home Repairs
Remodeling your kitchen doesn’t qualify. Emergencies such as a broken toilet, installing new pipes, or a new air conditioner are things that qualify.
Now that you know what qualifies as an emergency expense, you should start building it. If you would like our help, please give us a call at 763-231-9510.