If you don’t have an emergency fund, you can pretty much bank on an emergency! As soon as you finish reading this article start planning on how you can start funding one!
As you know there are thousands of financial advisers and experts on TV, radio and the internet and almost all of them will agree on one thing, you need an emergency fund! One of my favorite theory’s about an emergency fund comes from Dave Ramsey. Ramsey suggests having $1,000 in an emergency fund while you are getting out of debt. Once you are debt-free you should start pouring money into an emergency fund until you have 3-6 months of your income saved.
Why do you need an emergency fund?
Unfortunately, life doesn’t always happen as we plan. There are unforeseen expenses that tend to always pop up, and usually they at the worst times possible. If you don’t have the cash to take care of them, the typical American will throw the expense on a credit card and plan to pay it off over the next several months. But what happens when another emergency pops up while trying to pay off the first emergency? As you can see it can be pretty easy to start racking up some pretty hefty debt. If you have a fund in place to cover emergencies you’ll rest a lot easier at night.