Saving for the Scary Times – Emergency Savings Accounts

As we approach the scariest day of the year, our thoughts naturally drift towards ghosts and other spooky things. What else is really scary that should be keeping you up at night? If you haven’t started an emergency savings account, or you don’t have enough saved in it. Life’s unexpected events will be much less scary, and leave you much less vulnerable, if you have the funds set aside to cover them.

What will an emergency savings account cover?
Your emergency savings account will cover healthcare expenses, food, housing (rent, mortgage, home repairs, etc.), transportation, personal expenses, etc. It is important not to underestimate your expenses when planning how much to save.

How much should you have saved in your emergency savings account?
Experts’ opinions vary on this but generally, emergency savings accounts should cover six months to nine months of expenses. Families with a single income should be on the higher end of this range, while retirees with regular pensions can be on the lower end.

Where should you store your emergency savings account?
Conservative options to house your emergency savings account include opening a regular savings account, a certificate of deposit, or a money market account.  Consider making it somewhat inconvenient to access the funds, including housing the account at a different bank, so you will not be tempted to use the funds for anything other than an emergency.

How should you save for your emergency savings account?
It is best to set a small goal for your emergency savings account and then work your way up to a larger amount.  Consider making donations to the account as part of your regular budget, even having them automatically deducted from your paycheck.

If you have any questions regarding saving for your emergency savings account, please consult with your financial planner. Don’t let an unexpected event “boo” you!