Emergency Fund

• No one wants to believe their life can be turned upside-down in an instant, but we all know someone who has faced unexpected emergencies that may not be fully covered by insurance. 
• Your job performance may be negatively influenced by stress related to not being able to meet emergency expenses.
• You often have to pay very high interest and fees when you have to borrow money  in a hurry. 
• Depending on family and friends for emergency expenses may result in strained relationships. 
• If you cannot raise the funds, you will be unable to meet your needs.

• Decide how much you need to save.  Some employees are comfortable with $1000 - $2000.  Other employees prefer to save about three month’s  wages.  If these numbers do not feel right to you, ask yourself how much it would take for you to feel secure in an emergency, like the breakdown of a heater or car. 
• Treat your monthly emergency fund amount like you treat your electricity bill. Some employees even write out twelve bills at the beginning of the year to remind themselves to pay into the emergency account. 
• Your next step is to decide where you want to keep your emergency fund. You want to be able to get at your money fairly easily while still earning interest. An ideal place may be a saving account or a money market account in a federally insured financial institution (e.g., bank or credit union).  The FDIC website provides a list of insured financial institutions in your area.  The NCUA website provides a list of insured credit unions in your area. 
• If you’re like most people, it will take time to build your emergency fund.  Put aside as much as you can each month knowing there may be some months when you can afford more than other months.  Don’t give up!
• One easy way to build an emergency fund is for you to set up automatic deposits. Tell your bank that you want a fixed sum to be transferred from your checking to your saving or money market account each month.  Or you can ask your employer to automatically deposit  a fixed proportion of your paycheck in your emergency fund.
• Then, sit back and watch as your emergency fund grows month-after-month.  
• Click here to see how Americans are using their income tax refunds. Click here to see how wasteful spending ads up.

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