What Is a Personal Emergency Fund?
An emergency fund can best be described as an account or a form of savings by an individual that is to be used for emergencies or expenses that occur suddenly and without warning.
A personal emergency fund is something that many financial experts recommend all people should have in at least some form. Let’s take a closer look at the uses and importance, as well as ways to funnel money into an emergency fund.
A personal emergency fund has several uses with the most important being to serve as a safety net when the unexpected occurs and money is needed. The emergency fund is used for things such as the sudden loss of a job (or spouse’s job), sudden car repairs, and sudden health-related issues (like an emergency room visit). The fund is important because if faced with one of these situations, the lack of an emergency fund may cause a dire situation to be exaggerated even more.
Here are a few tips for those looking to save for a personal emergency fund:
- Treat the emergency fund like a bill.
- Start slow and build from there.
- Find ways to cut unnecessary things.
- Separate the emergency fund from other funds.
- Find a way to make additional money.