Do I Really Need An Emergency Fund?

Do you have an emergency fund? If not, it's time to get one started! While you are not required to have one, an emergency fund is always a good idea regardless of how well-off you are.

An emergency fund can be the buffer you need when an emergency occurs. Though most Americans don’t have one, an emergency fund is crucial in giving yourself a little financial peace of mind. Take the pressure off!

What happens if your car needs to be repaired urgently? What if your home’s heating system breaks in the middle of winter? What if you are hit with a sudden medical bill?

An emergency fund will help make any of those sudden financial situations a little less painful.

Why Do I Need One?

The purpose of an emergency fund is to take a little weight off of your shoulders when you are hit with an emergency expense. While your fund may not cover the entire cost, it will likely make it much easier to deal with by covering a good portion.

If you get into a jam where you need to spend $300 on a car repair and you have $250 in your emergency fund you only have to cover that additional $50. That is much easier to deal with than if you had to cover the entire cost of the repair.

How Much Should I Deposit?

There are no set rules for how much money you should have in your emergency fund but it is wise to have at least a few hundred dollars. Try and aim for $500 or more. You don’t need to deposit it all at once, either! Stash away money slowly if you don’t have a lot of wiggle room in your budget. The idea is to get in the habit of stashing a little away at a time until you reach your goal.

To keep yourself motivated remember that you are not paying a bill! You will still have all of the money you stash away, you are just making an effort to help yourself in the future.

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