Emergency Funds 101 for Your Wallet

Let’s break down the emergency fund – it serves as a foundational element, providing stability when there are financial uncertainties. Building a financial safety net safeguards your long-term financial well-being. In this quick guide, we’ll hit the basics of an emergency fund from a wealth management angle.

• What is an Emergency Fund?
  • An emergency fund is there to cover surprise expenses – medical bills, car breakdowns, sudden job loss – you name it. Having this fund is like a shield, so you don’t have to withdraw from your long-term money goals when life throws a curveball.
• How much should you save?
  • Your emergency fund’s size depends on your monthly spending, lifestyle, and salary. Money gurus suggest stashing away three to six months’ worth of living expenses. 3 months for a dual income household and six months for a single income household. This can give you a cozy cushion for short-to-medium-term challenges without going on the instant ramen noodle diet.
• Where do you keep your Emergency Fund?
  • Keep your emergency fund where it’s easily accessible, when needed. Think separate savings or a money market account – these accounts earn a bit of interest while keeping your money liquid.
• Building your Emergency Fund
  • Consistency is key when building up this fund. Set a goal and make regular contributions. Set up automatic transfers, so you’re building that safety net without even thinking about it.
• Review your Emergency Fund
  • Life can change quickly and correspondingly, your financial requirements. Check in on your emergency fund regularly. Life events like marriage, children, or career changes might mean it’s time to adjust your fund to keep up with the times.

Emerald Advisors, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.