Sandy’s “Emergency” Thoughts
I have mentioned this before in prior posts, but I keep getting questions about it.
One of the first savings that EVERYONE should have is an emergency fund for large, unexpected expenses. To be more specific, you should have two emergency fund savings.
The first fund is for true catastrophic events that may result in a total loss of income, such as a job loss or a disability that keeps you out of work. This is a fund that should provide at least three to six month of living expenses.
The second fund should be a “rainy day” fund for urgent but for less catastrophic needs such as a car or house repair. Homeowners should keep between $3,000 to $10,000 in this “rainy day” fund. You should have your rainy day fund and at least one month of emergency savings under your belt before bolstering retirement savings and even before you start tackling credit card debt.
There is no reason to be left “holding the bag” should some emergency occur. Proper prior planning is the only way to weather an unexpected financial storm.
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