We never know when life is going to throw us a financial curveball. Whether it be unexpected doctor bills, car repairs, traffic tickets, loss of job, etc. having access to an emergency fund is critical for satisfying unforeseen, instant monetary needs.

If you have no emergency fund established, utilizing credit cards are an option. But what if your credit cards are maxed out? Or, maybe the costs of your emergency are more than your available credit limit. You may also want to consider applying for an emergency loan. These types of loans are specific for resolving short-term financial needs, quickly. If you are just reading this page for educational purposes and you are not needing emergency money now, utilize the info below for help establishing a fund.

How Much Money Should I Have In My Emergency Fund?
The majority of financial advisers concur that 3 - 6 months of living costs be placed on the side for emergency situations. You will need to analyze your personal situation and calculate what amount is going to satisfy your needs. Some variables to consider when computing this amount will include how much monthly debt obligation you have, whether you have kids and what sort of insurances you encompass.

Typically, the need to save 3 - 6 months worth of living costs in your emergency savings is for dealing with an abrupt loss of income. In the event that you and/or your spouse are unexpectantly put out of work (fired or laid off), you are still going to have to satisfy your monthly debts and bills and it can be several months before you locate a new job. A good idea is to prepared for the doomsday situation. This way, when smaller fires erupt in your life, like replacing a broken washing machine, you will be able to do so with ease.

Start With Small Contributions
Saving money is not easy, especially if you are already living paycheck-to-paycheck. Saving several month's of living costs will take time. The secret is to begin putting small amounts aside, when you can. Establish small goals for yourself. For example, start out by saving $5-10/week. After one month, up the amount a few bucks. It may take you a year or two to reach your goal, but better late than never. You will only be setting yourself up for failure (likely giving up) by creating unreachable goals for saving. Get some tips for saving money.

A good idea would be to create a new savings account with your bank. As mentioned, attempt to make small, consistent deposits. It does not matter if you are making monthly, weekly, or whatever...the bottom line is, maintain your agenda! Eventually, going to the bank to put money into your savings will become an automatic task, without you even thinking twice.

Where Should I Keep My Emergency Fund?
Since you are beginning with small contributions, utilizing a savings account is your best option. Not only are savings accounts very easy to maintain, they typically are free of charge! Once you start to accumulate funds in your account, you should then explore accounts that have decent interest rates associated with them. You may also want to explore placing your money into a CD (certificate of deposit) or even an MMA (money market account). Make that money work for you! But, it is critical that your emergency fund is 100% accessible at any time. You want to be able to use the money as quickly as you need to. That's why we are calling it an emergency fund! Therefore, having this money tied up in stocks is not a good idea since most stocks are long-term investments; losing money in the short-term. Get more info about how to invest an emergency fund.

Related Reading:
Personal Loans for Emergencies
Where to Cut Back So You Can Save for Your Emergency Fund



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