Am I financially prepared for an emergency?
When you think “savings account,” what comes to mind first? Maybe it’s a down payment for a new home, or maybe you’re planning a big vacation. But before you can start saving for big future purchases, you need to make sure you’re prepared for the unexpected with an emergency savings account. Get the details here.
Long-term vs. short-term emergency funds
Here’s an interesting fact for you: According to the American Psychological Association, 72% of Americans name money as their #1 stressor at home. If you find yourself among that 72%, we have a few suggestions to help you financially prepare for the unexpected and hopefully ease your anxiety.
It’s good to consider emergency savings for the short term as well as long term. Let’s take a look at each.
How much should I save each month?
No matter how large or small your savings goal is, it’s a good idea to factor contributions to your savings account into your monthly budget. Use this calculator to compute the monthly deposit amount needed to reach a savings goal.
Best accounts for emergency funds
Keeping an emergency savings fund just makes good financial sense. Not only does it help keep you from relying on credit when an emergency arises, but it’s also just good for your stress levels! Knowing you have money set aside — even $500 is a great start, with the end goal of 3-6 months of expenses — can make a world of difference. But here’s a question that often gets overlooked: Where is the best place to keep your emergency funds? We’ve compiled some helpful information to get you started.
Small steps to a bigger emergency fund
Building an emergency fund might seem like a big undertaking, but really, even small steps can add up quickly. Here are a few of our favorites:
- Work with your payroll department to set up a separate direct deposit (or set up an automatic transfer from within your account) and divert a portion of each paycheck directly to your emergency savings — that way, the savings happen automatically and you won’t even miss those dollars.
- If you have checking and savings accounts with UBT, you can enroll in our RoundUp program, which automatically rounds up your debit card purchases to the nearest dollar and deposits the difference into your savings account each day.
- Consider adding bonuses, tax refunds, or other unexpected income to your emergency savings (provided you don’t have other more pressing needs to address, like revolving debt or repairs you’ve been putting off).
Whether you use these methods or take a different approach, don’t forget to revisit your emergency fund needs from time to time — perhaps if you’ve dipped into those dollars or your financial situation has changed. And as always, if you have questions, we’re here to help.
Our emergency fund calculator spreadsheet will help you determine how much you should set aside for the unexpected.
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