How to Build an Emergency Fund

Financial surprises can lift your spirits. An unexpected federal tax refund, finding a $20 bill in a shirt pocket on laundry day, or receiving an instant rebate at checkout can put a smile on your face. 但, when a water pipe suddenly bursts or an A/C unit stops blowing cold air on the hottest day of the year, the resulting financial surprise can quickly dampen your mood. 

An 应急基金 can help you maintain control of your finances when you’re blindsided by an unwelcome financial expense.

How much should you have in your 应急基金?

An 应急基金 should contain enough money to cover three to six months worth of living expenses. 需要绕一圈 five months to secure a new job according to recent Bureau of Labor Statistics data. If you lose your job, a six-month 应急基金 can help bring calm to the situation. Some financial experts recommend saving nine to twelve months of living expenses to account for variances in geographic location and industry.

How do I establish an 应急基金?

The first step to establishing an 应急基金 是 set a savings 目标. If saving six months worth of living expenses seems overwhelming, break down your 目标 and focus on putting aside enough cash to cover one month of expenses. Even saving $500 over the next 12 months can move you in the right direction.

Once you decide on an initial savings 目标, open a dedicated account that earns interest. Set automatic deposits from your payroll check or transfers from your checking account into the account to remove the temptation to spend the cash on frivolous purchases. 

Use different accounts to save for other financial 目标s such as trips, 退休, 或者大学费用. Keeping your accounts separate helps ensure the money will be there when you need it.

If you mix your emergency savings and other credit union accounts, it will be easier to spend the money on non-emergency purchases. 

Focus on building your fund quickly. The sooner you start an 应急基金, the sooner you can focus on other financial 目标s. Trim or eliminate unnecessary expenses while working on building your emergency savings. Tax refunds or pay bonuses are another way to grow your account quickly. Deposit the extra money into your emergency savings account.

Treat the emergency savings account as your financial insurance policy that earns interest. Only make withdrawals if you have a real financial emergency. 

What expenses should be paid by an 应急基金?

Since everyone’s budget is different, the exact expenses that an 应急基金 will cover will differ from household to household. The total costs can vary greatly. 例如, someone who is debt-free and rents their home might have lower expenses than someone with student loan debt and a mortgage payment.

Everyday household expenses covered by an 应急基金 during periods of unemployment include:

• 租金/抵押贷款 
• Insurance (renter’s, mortgage, car, etc.)
• 公用事业公司
• 信用卡付款
• 食品杂货
• 汽车燃气

Review your monthly budget to determine the costs the fund will cover.

Common household expenses covered by an 应急基金 while employed include unexpected home and car repairs, 医疗费用, 以及紧急宠物护理.

An 应急基金 can help you stay on track to achieving your financial 目标s. When life’s unexpected situations occur, use your cash reserve to prevent it from turning into a significant financial setback.