An emergency fund is money put aside for the worst case scenario such as job loss, major repairs or medical bills. How much money should be in an emergency fund? This varies according to a family’s risk tolerance and expenses. Some people might be comfortable with $1000, while others might want a year’s worth of expenses. In tough financial times, how is it possible to find $1000, let alone several months’ worth of living expenses?
Put away a Dollar a Day, No Matter What
A dollar a day doesn’t seem like a lot of money. Over a year, a dollar a day in a savings account turns into $365, plus interest. Do nothing more than a dollar a day, and in less than three years there will be $1000 in the emergency fund. Set an achievable goal to begin the pattern of saving for tough economic times.
Create an Automatic Savings Plan
It is easy to spend money that is in a bank account. It is much harder to spend money that is in a different savings account, online savings account, or a flexible term deposit. Create an automatic savings plan that withdraws money every paycheque and deposits it in another account that is difficult to access. This money will become the basis of an emergency fund.
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