Using an Emergency Fund
We all have moments in life when something happens that we aren’t expected to face. Whether it’s a sudden job loss, family emergency or an unplanned home repair, these situations can leave us feeling stressed and overwhelmed.
When emergencies and unexpected situations arise, it’s important to be financially prepared. No matter what stage of an emergency you’re in, starting to plan now is your best option. One important and helpful way to prepare is by creating an emergency savings fund.
The first step in creating a savings account you can use for unforeseen circumstances, is to restructure your current budget. Some expenses like mortgage or loan payments can be hard to change, but there should be other areas where you can easily adjust your spending and cut back to make room for an emergency fund. Even $10 or $15 a paycheck can help you get started saving. This budget calculator can help you lay out specifics and make those adjustments.
Ideally, you want to save enough money to cover three to six months of essential living expenses to use for emergencies. Essential living expenses include mortgage or rent payments, utility bills, critical medical expenses, transportation costs and groceries – things you can’t live without. Three to six months of your expenses may be a large number, but don’t panic! Any amount you save toward your emergency fund will help.
In certain situations, contributing even more to your emergency savings may be necessary. A bigger emergency fund is a smart idea if:
- You’re self-employed
- You’re in a one-income family
- Your paycheck is dependent on commission
- You or a dependent have a chronic medical condition
- You frequently engage in adventurous or risky hobbies
While tough times are never ideal, good preparation and thoughtful financial decisions can help you and your funds weather the storm.
Atlantic Union Bank partners with Banzai, a financial education tool that gives you clear, in-depth lessons that help you dive into the financial topics you care most about. To learn more about building an emergency fund and other financial topics visit AtlanticUnionBank.Banzai.org/wellness