It’s important to be prepared for a rainy day because no one can predict the future. We would all love a crystal ball to see when our hot water heater was going to break or when the car isn’t going to start on a cold morning, but that’s not possible.
Since we can’t predict the future, we need to be prepared for the possibilities that could be thrown our way.
You should open a savings account that is your designated emergency fund. Used only for emergencies.
How much should you save in your emergency fund?
That’s a tough question. We recommend starting with $1,000. The end goal is to have 9-12 months of living expenses saved in your emergency fund. The best way to figure that number is to add up all your necessities for one month: utilities, groceries, house payment, car payment, insurance costs, etc. and multiply it by 12 or how many months you want to save for.
You should you have more than 12 months of expenses saved?
Every person and every family is different. No one is a like, which means their financial situations differ. You should really talk to your accountant or financial advisor before making this decision.
If you would like help coming up with your emergency fund savings plan, give us a call at 573-686-3053.