An emergency fund allows you to live for a few months if you lose your job or if something unexpected comes up that costs a fair chunk of money to cover. Many banks and financial experts suggest that you should save anywhere from three to six months worth of salary in your emergency fund.
What are the pros and cons of having an emergency fund?
Share this articleProsConsSave money on interest Once debts are paid, an emergency fund can be built quicklyMust resort to more debt for unexpected costs Can lead to higher financial stressDec 9, 2020
What does an emergency fund cover?
An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. Medical or dental emergency. Unexpected home repairs. Car troubles.
Where should I keep my emergency funds?
When deciding where to keep your emergency fund, consider these four different accounts that offer easy access and benefits:High-yield bank accounts. Sunny skies are the right time to save for a rainy day. Money market accounts. Certificates of deposit (CDs) Roth IRA.
How long should it take to save emergency fund?
In short, it should take you between 6 and 18 months to build an emergency fund. As a rule of thumb, you should expect to spend twice as many months saving, as your emergency fund will cover. So, for example, you should plan to spend 12 months building a six-month emergency fund.