Starting an Emergency Fund: What You Need to Know

We can never be certain what the future holds, so it’s always best to be prepared. Financially, this means building an emergency fund in case of, well, an emergency. If you don’t have an emergency fund yet, don’t worry. The financial advisors at American Investment Planners, LLC will tell you everything you need to know to build one.

What is an emergency fund?

An emergency fund is just what it sounds like – a separate account set aside specifically to cover unexpected expenses that may pop up.

Why everyone should have an emergency fund

You never know what life is going to throw at you. An emergency fund will help cover your financial shortcomings in the event of monetary emergencies such as:

• Losing your job
• Automobile breakdown
• Home repairs
• Major medical expenses
• Unanticipated travel
• Loss of a family member

How to build your emergency fund

• Open a new account. First things first. If you don’t already have an emergency fund established, head over to your bank and open a new account. You should always keep your emergency fund separate from the rest of your money. Skip the ATM card, too – the less convenient it is for you to access this money, the better.
• Set a realistic target number. Eventually, your emergency fund should be able to cover six months of expenses. This may seem like an overwhelming number, so start with something more manageable: such as $1,000. If you can set aside just $20 each week, you will have $1,000 in your emergency fund in a year.
• Automate the process. Once you have determined how much money you will be setting aside each month, enroll in automatic deposits. This way, you will never forget to transfer your emergency fund money, nor will you be tempted to spend it on something else.
• Track your progress and look for more ways to save. Keep close tabs on your deposits every month. Are you on track to meet your goal? Even if you are, there is still room for improvement. Look over your budget and try to find more ways to save. Just 28 extra cents per day can add up to $100 over the course of a year.

American Investment Planners, LLC offers professional financial planning services to individuals and families across the country. Whether you need help building an emergency fund, planning for retirement, or anything in between, our financial advisors are here to help.

To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.