Emergency Fund FAQs to Answer

Do you have an emergency fund? Are you in the process of building your account as to gain more financial comfort? Are you starting at zero?

When it comes to your emergency fund, you may never feel comfortable. You may always feel like you need more money.

Even so, having something saved in an emergency account is better than nothing at all.

If you’re unsure of what you should be doing in regards to your emergency fund, it’s time to address these important frequently asked questions:

•    What’s the right amount of money to keep in an emergency fund? Unfortunately, there is no simple answer to this question. It’s based on many factors, including your monthly expenses, your personal life, and your career. If you’re seeking a general rule of thumb, aim for six months of living expenses.
•    What’s the best place to keep an emergency fund? While you have a few options, it’s best to choose a liquid account. You want to be able to get your hands on the money should the time come. This typically means a savings account at your local bank.
•    When does it make sense to use the money in an emergency account? Again, there is no single answer to this question. What you consider an emergency another person may consider nothing more than a minor setback. Some examples of emergencies include medical bills, a car or home in need of repair, or a family member who is in desperate need of financial assistance.
•    What’s the point of starting an emergency fund? Generally speaking, this is meant to give you peace of mind in the event that you face an emergency that will set you back financially. Without an emergency fund in place, you could find yourself turning to other sources – such as a retirement account – to deal with the issue. 

By answering these frequently asked questions, you’ll feel better about starting and maintaining an emergency fund.