For you to be financially secure, it is a good idea to invest money into an emergency cash fund. What is an emergency cash fund and how can it help you? An emergency cash fund is a savings account that is used to provide you with money to use in the event of an emergency. Job loss, medical expenses, and other things are bound to happen. Do you have the money to pay for these needs? If you do not have the money, you will likely end up borrowing the money from credit cards and other accounts. This can cause a debt cycle to occur and can leave you dealing with a difficult situation. It is important that you establish a rainy day fund so you have somewhere to grow the emergency money. How much should you add to the emergency cash fund? Here are some answers to these questions to help you create a good emergency cash fund to survive off:
- The Bureau of Labor Statistics recommends that you have at least 6-12 months worth of income saved up for emergency needs.
- Online savings accounts and money market accounts provide you with a higher interest rate, helping you to grow your money. Compare rates online to see which savings accounts can give you the highest rate and provides you with the best protection for your emergency savings account.
Unfortunately for many Americans, the reality of debt crushes the ability to save. When you end up with higher amounts of debt, you will find that the ability to save money is next to impossible. The best option you have is to work hard on paying down your debt amount and then saving money. To be prepared you might even consider saving just $100 a paycheck just so you have something to fall back on in the event that you have something happen and you need quick cash.
To know how much money you need you need to add up how much you owe on all of your fixed expenses and other accounts like gas, food, credit cards, daycare, etc. Knowing all of your expenses will give you a better idea as to how much money you need to have saved up in your emergency cash fund.
Open an online savings account to earn a higher interest rate. Compare rates often to make sure you are getting the highest amount possible in order to grow your emergency money properly.