Clark even suggests keeping them at separate financial institutions. It’s important to keep your emergency fund and checking account separate. Savings Account: Online Bank or Credit Union Quick answer: in a savings account at an online bank or a credit union. It’s great if you can eventually store six months’ worth of expenses in an account that’s easily accessible. If you’ve already set up automated transfers to your emergency fund and you want to quantify your goal, figure out the total of your household’s monthly expenses. It’s better to save first rather than waiting to see if you have any money left over. He recommends setting up an automatic transfer into the account that holds your emergency fund every paycheck or once a month. “And then, when you’re in that habit, you really can move toward the goals that are really going to change your financial future.”Ĭlark likes automated savings. “It’s all about building habits, whether it’s with your health or your wallet, that you do it one step at a time,” Clark says. Then increase the amount you’re contributing over time. Just get in the habit of contributing to your savings account. Don’t feel pressured to meet a quota or a timeline. If you don’t have any savings, take $10 from your next paycheck and put it into a savings account. How much money should you keep in an emergency fund? It’s a fair question, but if you’re just getting started as a saver, focusing on the number may not be helpful.Ĭlark says that your first priority as a saver is to start somewhere. How Much Money Do I Need in My Emergency Fund? Worse, many Americans have to pay for them with high-interest credit cards or by borrowing money. We’re all certain to experience unexpected financial surprises at some point. “Because ‘oops’ happen - all different types and sizes - and a lot of times we’re not in a position to deal with them.” “If you don’t have savings, then you’re not prepared for the ‘oops’ in life,” Clark says. Clark sometimes calls them rainy day funds or “oops” funds. ![]() What Comes First: Paying Debt, Saving or Investing?Īn emergency fund is money you set aside, in an accessible place, to pay for unexpected expenses like car repairs or medical bills.Įmergency funds also can protect you if you lose your job. ![]()
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