Do you have an emergency fund? Emergency funds help to protect our future. What will happen if you suddenly are not able to earn enough money? Do you have money set aside to get you through these hard patches? By taking action early and setting up an emergency fund, you ensure that should these circumstances arise,  you will have enough money to see you through a couple of hard months. So, how do you set up an emergency fund?

Start by Determining How Much You Really Need in Order to Survive

Start by working out exactly how much you need in order to just get by each month, without any extras and living on the bare minimum. If you are ever in a situation where you really do not have enough, then this amount will provide food and help cover your most important living expenses.

Decide How Many Months Cover You Want

In addition to working out the bare minimum that you need in order to survive one month, determine how many months you want this cover. Once you know this, multiply the number of months cover you want by the amount you need each month to get the total amount that your emergency fund should hold.

Decide How Much You Can Afford to Save Now

The next step is to take a look at your current budget and determine how much you will be able to save now in order to build up your emergency fund.. Try to save as much as possible in order to build up your emergency fund quickly, but do not be unrealistic about the amount you need to live on at the moment as you will need to remain disciplined.

Be Disciplined in Your Savings

Open a savings account that will be set aside for your emergency fund that offers a good interest rate but with fairly flexible terms so that you will be able to get hold of the money when you need it.  Then be disciplined in saving each month. Don’t touch the money in your emergency fund until you truly have an emergency or when you really need it, it will no longer be there or you will have less available.

An emergency fund is a great way to protect your future by taking disciplined steps in saving each month. Decide how much you need each month, how many months you need your emergency fund to cover, as well as how much you can afford to save now and then open your savings account and start saving.

Stacy Francis, CFP®, CDFA can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 212-374-9008.
www.francisfinancial.com and www.savvyladies.org