We have all heard of the importance of having an emergency fund. This is cash set aside (generally 3-6 months of expenses) that is secure in a high yield savings account. It is liquid (not invested in the market), but is still making a return (generally 4-5% with today’s interest rates). This nest egg can provide an important cushion between us and life when the inevitable happens (cars break down, unexpected medical bills or a job loss, etc.).
However, when events bigger than these happen on a larger scale like the recent global tech outage that disrupted airlines and countless other businesses, it highlights the importance of an emergency fund. Cash on hand gives you options and margin to pause for a moment and make rational decisions. It can provide the breathing room that we need to avoid making bad decisions. According to a recent Bankrate survey, 56% of U.S. adults would not have the savings to handle a $1000 emergency*. Life these days is expensive and it doesn’t take much to blow past that dollar amount.
Making savings a priority can be a gamechanger! Automate this goal by having a percentage of your paycheck go to your savings account every month. Challenge yourself to see how fast you can build up a fully funded emergency fund of 3-6 months of expenses. A few months of eating at home and saying no to extra expenses is worth the peace of mind this emergency fund will provide for you and your family!
*https://www.foxbusiness.com/economy/most-americans-cannot-afford-1000-emergency-expense