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Emergency Money for a New Economy

How much reserve money you really need right now?

By
Laura Adams, MBA
4-minute read
Episode #114

How to Get Started

Yes, a minimum of six months of expenses is a lot to save. If funding an emergency account seems too daunting to you, begin by taking baby steps. Make a goal to accumulate $1,000, then $2,000, as quickly as you can. Try to steadily build up your reserves until you reach your goal. This might require some sacrifices to reduce spending, especially if you’re like most and are already cutting back.

If you’re not a disciplined saver, here’s a tip: put it on auto-pilot. If you receive a paycheck by direct deposit, ask your employer to split your payment between your regular checking and your emergency account. If you get a paper check or are self-employed, set up an automatic transfer from your checking into your emergency fund. This way you never see the money and don’t even have to think about it.

Where to Keep Emergency Money

Emergency funds should be easy to access, but not so easy that you’ll be tempted to spend them. It’s best to keep reserves completely separate from other accounts. In next week’s show, I’ll cover specific options for the best places to stash your cash. We’ll cover important issues to consider so you can keep your money safe and still working hard for you.

Get a Move On

An emergency fund is one of the most important financial “must-haves.” So there’s no time to spare in getting started. No one said financial security would be easy, but the goal is to be as prepared as possible to survive the tough times.

Administrative

Are you looking for successful strategies to save and invest for a secure future, even during market volatility? Check out my new audiobook, Money Girl’s Guide to Retirement Planning. Find it on iTunes and Audible.com.

I’m glad you’re listening. Chi-Ching, that's all for now, courtesy of Money Girl, your guide to a richer life.

Emergency Fund image courtesy of Shutterstock

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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 frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlersbook is her newest title. Laura's previous 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.