How to Create an Emergency Fund for Those Hard Times...
Crises... You know they're going to happen. They always do. You are sailing along fine in your little world and them BOOM! All of a sudden, something happens to pull the rug out from under you and you are left sitting there, basically helpless, not knowing what to do or how you will get through the crisis that has just occurred. These are the times that that good ole 'Emergency Fund' will come in useful.
Some people may question the necessity of having an emergency fund. After all, is it really necessary? How do you go about it? Does it need to be a huge amount? Here are some ideas and suggestions that should help answer these questions.
Should I Really Have an Emergency Fund?Generally speaking, yes, you really should have an emergency fund. What would you do if something unforseen happened, such as a tornado or fire (god forbid) and your home and belongings are wiped out? There is no set form it should take, this can vary from person/family to person/family, but it really is a very good idea to start an emergency fund. Having such a fund can help you avoid high-interest debt, and it will help you reduce the stress that can occur in emergency situations. After all, life is full of changes - many of them sudden and not good - and having that "cushion" that you can fall back on, can help you feel ready and calm.
First, you need to determine your expenses. Look at three to six months' worth of living costs and count on saving that much in a fund. This can help you keep your standard of living for a time if you lose your job, or it can cover a large expense such as vehicle repair. Then determine how long it will take you to save that much and how much you have to take out of your paycheck each month to reach that goal.