5 Simple Steps to Create an Emergency Fund

An emergency fund is part of a cash reserve, which is simply extra money set aside to handle unexpected events that happen in your life. 

Many people know they should have an emergency fund, but few take the time to actually build one or know where to begin.

Your emergency fund will protect you when life happens. Follow these simple steps to create and emergency fund and the peace of mind you need.

Who should have a cash reserve emergency fund?

Unfortunately emergencies happen to everyone and you never know when one might strike. 

 If you’ve got financial goals, if you want your family to be financially secure and not have to worry about being wiped out by a roll of the die, then you need an emergency fund.

How much money should I set aside for my emergency fund?

Traditionally, I suggest your emergency fund should be between 3 to 6 months of monthly expenses.

For individuals with uneven income and those who want a more secure cushion, that suggestion may increase to 9 months’ worth of expenses, just in case.

How do I start and emergency fund?

As with many of your financial goals, you may need to start small with your emergency fund if money is tight. 

Setting up an emergency fund is not something you absolutely must do overnight. Build towards a goal amount each month by budgeting a little towards the fund until it is fully funded.

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