Emergencies: Better Be Prepared
by Doris Dobkins
How Much of an Emergency Fund Do I Need?
6 Squirrely Ways to Save
Easy Ways to Build an Emergency Fund
Emergency funds are a stash of cash that you can get your hands on when the need arises. How much money do I need to keep on hand and where should I keep it are two great questions I often get asked...
Well, the best way to determine how much money you need for emergency purposes is to do some planning. Some things to think about would include:
- travel expenses to family or relatives for illness or death
- deductibles or co-pays on medical expenses
- automobile deductibles or temporary replacements in case of an accident
- auto repairs, tires, and other mechanical issues
- family or friends upcoming weddings, travel expenses and gifts involved
- replacement of old appliances you know are on their last leg
- birthday, anniversary and holiday gifts or parties throughout the year
- vacations, family reunions or other travel where expenses could be incurred
When you plan your budget each year, (you do make an annual budget, don't you?) generate some numbers for any of these examples that might be applicable to you. Try to keep some money available for use in an emergency. You may even want to set up a home equity line of credit, just in case. But do not use the credit unless you have to. The purpose of the credit line is mainly to tie you over on expenses that you can be shortly reimbursed for.
Some places to keep your emergency funds are in a savings account, bank money market deposit accounts, certificates of deposit, or money market funds.
Doris Dobkins is a money saving expert, author and speaker and has helped thousands of people find ways to save money and get out of debt.