Check Your Emergency Fund Readiness
Have you ever felt stressed when faced with an expense that isn’t part of your regular spending? This course will help give you peace of mind as you figure out a strategy to cope with unplanned expenses and untimely cash flow challenges.
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Are you having difficulty paying your regular monthly bills, bouncing checks or managing your debt?
Research shows that households with savings less than $500 are twice as likely as those with more savings to experience issues like these.
Do you have $500 or more readily available to cover emergencies?
survey by the Federal Reserve, only 48 percent of respondents said they could cover an expense of $400 without borrowing or selling something. Research has shown that households with emergency savings below $500 were more prone to worry, loss of sleep and other ill effects than households with more savings.
Do you know the total amount of your monthly financial obligations?
It’s important to know your basic monthly expenses. When starting an emergency savings fund, first satisfy your monthly basic expenses and then use what is left to start saving.
Do you have quick access to enough money to cover three to six months of expenses?
While it might seem like a lot to save, ideally you should be able to cover three to six months of your family’s basic expenses in case your income drops or needs to be used for large unplanned expenses. Having enough money in reserve is crucial to managing unplanned financial challenges.
Do you regularly add money to your savings?
Just as you plan to cover necessary monthly expenses, make it a priority to save money for emergencies. Also use some or all windfall money — such as tax refunds, gifts, bonuses or an inheritance — to build an emergency fund.