Set Up an Emergency Fund to Help Plan for Your Future

Posted by: Lisa N. | Jan 05,2008

Setting up an emergency fund is one of the hardest things to do when you’re trying to plan for the future. An emergency fund is money that you set aside in case something out of the ordinary happens. In researching blog ideas for the Credit Tips blog, I was surprised to find that most credit card debt isn’t caused by spending money on extras. Most of our country’s credit card debt is caused by using credit cards to pay for unexpected expenses, like medical expenses and regular household expenses.

 

When you decide to create an emergency fund, think about how many months you might need to live off of the fund in case the unexpected should happen. If you lose your job, or have unexpected medical expenses, you don’t want to have to get into your retirement funds to pay you bills. Try to save enough in your emergency fund to support you and your family for three to six months.

 

Your best bet when you’re trying to save money for an emergency is to put it where you can’t access it too easily. Put money in a savings account and name the account “emergency fund” in your online banking portal so you don’t forget why you are setting that money aside. Put the money in a certificate of deposit (CD) and you’ll make more interest on the investment and you’ll have to pay a penalty for early withdrawal.

 

Learn more about creating an emergency fund for your family.

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