How To Build an Emergency Fund
Everyone knows that it’s important to have a solid monthly budget. Unexpected expenses can easily derail it, though, if you’re not careful. To protect your finances, you need savings that you can dip into when sudden issues arise. Here are some tips for building a functional emergency fund.
Set Reasonable Goals
Start with your existing budget. If you already have a savings plan built into it, consider reallocating part of that monthly commitment to a separate savings account. That way, you keep the money you’re saving for planned extra expenses such as vacations or gifts separate from your emergency fund. Divide all your expenses into essential and nonessential categories. This can reveal more money available to build up your emergency fund more quickly. Eventually, it’s a good idea to have the equivalent of at least three months’ salary saved up. If the emergency forces you to take a sabbatical …
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