Emergency Savings Series - Part 2

Long-term Emergency Savings 

When you’re building a long-term emergency savings fund, the goal is to have enough money to cover your expenses (not your full salary) over several months if your household income is interrupted.

• If you have a budget, you already know your monthly expenses: housing, food, utilities, debt repayments, transportation costs, insurance and all of your other “must-pay” bills. 
• If you haven’t calculated your monthly expenses, use this site to understand your expenses and income then take time to develop a budget. https://bit.ly/1McNnXb

How much do I need? 
This is where you hear goals like saving enough money for three, six, nine or more months of expenses. Don’t let these amounts scare you into doing nothing. Like any goal, breaking it down into smaller parts can help you get started. Ask yourself, “How many months of savings would it take for me to feel secure?” Tips:

• To get started, you may want to set a three-month goal, and once you hit that, set the new goal at six months. 
• If you have a job where your pay can vary from month to month, or if you work in an unstable field, you may want to increase the number of months’ expenses for which you save. 

Is it really an ‘emergency’? 
Expecting the unexpected....it’s why you have an emergency fund in the first place. When a situation arises, ask yourself if it’s really an emergency before you tap into your savings fund.  Below are examples of some situations that are emergencies and some that are not.