Building Emergency Savings: How Much Should You Set Aside

  • August 11, 2023
  • Financial Partners Credit Union

Building Emergency Savings: How Much Should You Set Aside

When it comes to finances, one of the smartest things you can do is prepare for the unexpected. That means building up an emergency fund to cover unexpected expenses – like a medical bill, car repairs, or losing your job. How much you should save depends on your situation, but a good rule of thumb is to set aside 3-6 months’ worth of living expenses.

Saving for emergencies can be tough, but there are lots of great products and services out there that can help – including savings accounts and share certificates that offer higher dividend rates (also known as interest rates)  than traditional banks, so you can grow your savings faster.

If you’re not sure where to start, check out our tips on how to build an emergency fund. And if you want more information on how to start building your savings, contact one of our personal bankers! We’re here to help you make smart decisions about your money.

 

Why you should have an emergency fund

It pays to be prepared, and setting aside funds specifically for emergencies is something you should definitely consider. An emergency fund should ideally be large enough to cover three to six months of basic living expenses such as rent or mortgage payments, food, transportation, insurance premiums and medical costs in case of job loss or financial hardship. Financial Partners offers an array of products and services that can help you build your emergency savings, making it easy for you to access your money quickly and responsibly in the event that you need it. Plan ahead and take charge by investing in an emergency savings fund today!


How much you should set aside in your emergency fund

When it comes to your finances, saving up for a rainy day should be a top priority. According to financial experts, you should aim to hold an emergency fund that is equivalent to 3-6 months of your living expenses. The specific amount you should set aside will depend on your individual situation, such as if you have stable income and a steady job. To get you started on this, Financial Partners offers high yield savings accounts with competitive dividend rates (also known as interest rates) that can help maximize your growth potential. Furthermore, having easy access to your savings with minimal fees is always helpful when the time comes to use them. These tools can have you well on your way towards becoming financially secure in the long run.
 

 

Ways to save for your emergency fund

One easy way to start building those savings is with a share certificate, which offers great rates if you put your money in it for a specific term. If you need an account that you can access more readily, a high yield savings account may be a better option. Consider setting up a monthly transfer so that a predetermined amount of money goes directly into your emergency fund every month – this helps to ensure you are consistently putting money away.

Another effective way to build an emergency fund is to start cutting expenses that add up over time. Everyday luxuries like daily trips to the coffee shop or subscription services may seem insignificant, but they can quickly add up and take away from your savings. Consider taking small steps to cut back on extraneous expenses and invest that money instead.

Building an emergency fund takes time and dedication, but it’s worth the effort in the long run. Setting aside even a small amount every paycheck will add up over time, and you can find products from your credit union that can help you grow your emergency fund faster. Understanding why you need an emergency fund and how best to use it are key elements in the process of creating a financial strategy. By becoming informed and proactively saving money, you can make sure your finances are prepared in case of an unexpected bill or expense.
 

*Minimum deposit is $1,000. APY=Annual Percentage Yield. Fees could reduce earnings on the account. Penalty for early withdrawal closure. New money required, source of funds deposited into certificate may not be from an existing Financial Partners Credit Union. Rate quoted as of April 24, 2024. Offer is subject to change, be revoked, or end at any time. Financial Partners Credit Union membership required.