We have all experienced unexpected expenses. It can be hard to bounce back after a costly unplanned purchase. Things like a medical crisis, home appliance breakdowns, or car troubles can drain our accounts. What if building an emergency fund provided a better way to deal with life’s unpredictable situations?
Short-term vs. long-term emergency fund
The short-term emergency fund consists of about $1,000 and supports you through critical one-time events. The long-term version is for extended occurrences, such as job loss. It carries you through 3-to-6 months of dealing with a condition without additional income.
Why should you have an emergency fund?
While there are many ways to obtain quick funding, such as a personal loan, the emergency fund generates the highest profit. Since they are funds stored in your savings account, they will collect interest. These funds not only help you during a cash emergency, but they can increase your wealth over the long run.
How to quickly save money for emergencies
1. Review your budget
2. Determine your emergency fund goal
3. Work gig economy jobs
4. Put all income bonuses into your fund
5. Consider direct depositing a portion of your paycheck into your savings
6. Do not tap into your fund unless it’s a true emergency
Where to keep an emergency fund
The best place to keep an emergency fund in is an interest-bearing savings account. Achieva Credit Union offers savings accounts that have no monthly service fee. That means the more you put in your accounts, the more you’ll earn in interest.
To read other funding-related articles, browse through our catalog of financial planning pieces. We love helping our members reach their savings goals.