Why You Need An Emergency Fund And A Spare Tire
What’s an emergency fund?
It is a fund that sits dormant in the bank and is only used if you are in a crisis that needs money to fix.
My Flat Tire Could Have Been An Emergency
Because I had the spare tire ready to go, I was only 10 minutes late for work. If I did not have a spare tire that was inflated, I would have needed a ride to the local tire shop to get it fixed and a ride back to install the fixed tire.
What’s An Emergency Fund And Why Do I Need One?
It is a fund that sits dormant in the bank and is only used if you are in a crisis that needs money to fix.This is the fund to help you get your car up and running again or to purchase a “new to you” refrigerator.
How Do I Start An Emergency Fund?
How much money should I have in my emergency fund?
Properly funded emergency savings should have $2,000 in it to protect you against life’s unexpected financial emergencies
How Long It Should Take To Fund An Emergency Saving
The time it takes to save up an emergency fund depends on your income and your expenses.
When should you start an emergency fund?
If you currently do not have an emergency fund, this should be your number one priority. You should fully fund your emergency savings before you start paying off debt.
Should I Invest My Emergency Savings?
You should not invest your emergency fund. This money needs to be readily available in the case of an unexpected expense that you can not pay for out of your regular income.
How To Replenish Your Emergency Fund
If you are forced to dip into your emergency fund to pay for an unexpected expense, you should immediately go back to paying the minimum on all our outstanding debts. Just as you initially funded your account, you should divert all extra money to your emergency savings until it is fully funded again.
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