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Emergency Money for a New Economy

How much reserve money you really need right now?

By
Laura Adams, MBA
Episode #114

In this episode I’ll discuss the importance of an emergency fund and how much you really need as a savings goal right now.

Why Have An Emergency Fund?

We all know we should have some emergency funds to help us through those unforeseen emergencies in life. You know what I’m talking about: your car won’t start, your computer crashes, you get the flu, your water heater quits working. Or what about the granddaddy financial emergency of them all — you lose your job or business income?

Many people don’t think about the financial “what-ifs?” in life. They happily trot along until some large expense or crisis really throws them. That’s when you want a nice soft cash cushion to land on. The alternative for many is to pull out a credit card and make charges that they really can’t afford.

Definition of Emergency

Emergency funds should be tapped only for real emergencies. Even though it may feel like it at times, taking a vacation is not an emergency! Buying presents, extra clothes, computer games and the like are not emergencies either. The purpose of emergency funds is to keep you healthy and safe during times of unemployment or other unexpected crisis situations.

Eliminate Financial Stress

The solution to dealing responsibly with unplanned expenses is to save up an adequate cash reserve fund. It should be very liquid so you can access it immediately. Having enough money at your fingertips for emergencies shouldn’t be thought of as a luxury; it should be your top financial objective. The stress you can eliminate by having a healthy reserve fund is truly amazing!

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a trusted and frequent source for the national media. Her book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show. 

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