How to Save for Emergencies

<h2> You need an emergency fund!</h2> <p> It will keep you financially prepared in a crisis that will likely ask a lot of your energy without counting in the financial factor. Another reason is that being in control of rare eventualities gives a lot of people a sense of accomplishment and security as opposed to a nagging feeling of fear because you're not really prepared.</p> <p> What are financial emergencies? Any amount needed to be covered that is not already covered by a budget category or insurance.</p> <p> True emergencies are situations that arise unexpectedly and are not already covered in your usual budgeting process.&nbsp;Therefore, a credit card bill is not an emergency. It should be taken care of by using regular budget processes. A true emergency is losing a job and the income that comes from it. A sample of a true emergency is a medical emergency, not covered by medical insurance,&nbsp;that costs thousands of dollars out of pocket.</p> <h3> How much do you need?</h3> <p> The recommended amount is usually a total of 3-6 months take home pay. And while in the beginning, this is a daunting task you need to keep in mind that this is considered a long-term goal. Just like Rome wasn't built in a day. In fact, emergencies usually only happen a few times during a lifetime. If all other savings and expenses are properly budgeted for, they will take care of themselves.</p> <h3> How do I set up an emergency fund?</h3> <ol> <li> Take your monthly take home pay and multiply it by 3, 4, 5 or 6 to get a grand total of how much is desired to be in the fund. (5 is a pretty good number)</li> <li> Take that number and divide it by a number of years (5-10) times 12 (aka the overall number of months) to figure out how much per month needs to be saved.</li> </ol> <div class="well success bird"> <p> <strong>Example</strong>:</p> <p> 1 month take home pay is $3,000.</p> <p> $3,000 x 5= $15,000.</p> <p> Then try a 5-year savings plan. $15,000 divided by 60 (5yr x 12 mon) = <strong>$250 per month</strong></p> <p> Too much? Apply a slightly longer time frame:</p> <p> Try a 7-year savings plan. $15,000 divided by 84 (7yr x 12 mon) = <strong>$175 per month</strong></p> <p> It is still a lot but it is a personal insurance policy against real emergencies. Also, if you were to have an emergency after 4 years, you would have built up fund worth around $8,400 plus interest. It will help weather the financial storm much better than having nothing. Having nothing means a loan and a loan means interest and a loan is a pain.</p> <p> <em><strong>Note</strong></em>: It may take several attempts to find a value that is possible or reasonable.</p> </div> <h3> Where to invest your emergency fund?</h3> <p> It must be mentioned that the funds should be put away in a safe place, not easily accessible. Putting the funds into GICs or ETFs makes it a bit tougher to get at. The funds could also be put into a joint account that needs two or more signatures to get at them. These methods make sure the funds will really be there when the need arises.</p> <p> <u><strong>+++link to our Emergency&nbsp;Planner+++&nbsp; - should this be here???</strong></u></p> <p> &nbsp;</p>

<h2> You need an emergency fund!</h2> <p> It will keep you financially prepared in a crisis that will likely ask a lot of your energy without counting in the financial factor. Another reason is that being in control of rare eventualities gives a lot of people a sense of accomplishment and security as opposed to a nagging feeling of fear because you're not really prepared.</p> <p> What are financial emergencies? Any amount needed to be covered that is not already covered by a budget category or insurance.</p> <p> True emergencies are situations that arise unexpectedly and are not already covered in your usual budgeting process. Therefore, a credit card bill is not an emergency. It should be taken care of by using regular budget processes. A true emergency is losing a job and the income that comes from it. A sample of a true emergency is a medical emergency, not covered by medical insurance, that costs thousands of dollars out of pocket.</p> <h3> How much do you need?</h3> <p> The recommended amount is usually a total of 3-6 months take home pay. And while in the beginning, this is a daunting task you need to keep in mind that this is considered a long-term goal. Just like Rome wasn't built in a day. In fact, emergencies usually only happen a few times during a lifetime. If all other savings and expenses are properly budgeted for, they will take care of themselves.</p> <h3> How do I set up an emergency fund?</h3> <ol><li> Take your monthly take home pay and multiply it by 3, 4, 5 or 6 to get a grand total of how much is desired to be in the fund. (5 is a pretty good number)</li> <li> Take that number and divide it by a number of years (5-10) times 12 (aka the overall number of months) to figure out how much per month needs to be saved.</li> </ol><div class="well success bird"> <p> <strong>Example</strong>:</p> <p> 1 month take home pay is $3,000.</p> <p> $3,000 x 5= $15,000.</p> <p> Then try a 5-year savings plan. $15,000 divided by 60 (5yr x 12 mon) = <strong>$250 per month</strong></p> <p> Too much? Apply a slightly longer time frame:</p> <p> Try a 7-year savings plan. $15,000 divided by 84 (7yr x 12 mon) = <strong>$175 per month</strong></p> <p> It is still a lot but it is a personal insurance policy against real emergencies. Also, if you were to have an emergency after 4 years, you would have built up fund worth around $8,400 plus interest. It will help weather the financial storm much better than having nothing. Having nothing means a loan and a loan means interest and a loan is a pain.</p> <p> <em><strong>Note</strong></em>: It may take several attempts to find a value that is possible or reasonable.</p> </div> <h3> Where to invest your emergency fund?</h3> <p> It must be mentioned that the funds should be put away in a safe place, not easily accessible. Putting the funds into GICs or ETFs makes it a bit tougher to get at. The funds could also be put into a joint account that needs two or more signatures to get at them. These methods make sure the funds will really be there when the need arises.</p> <p> <u><strong>+++link to our Emergency Planner+++  - should this be here???</strong></u></p> <p>  </p>

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