Emergency funds are the most essential part of financial planning. No matter if you are alone and take care of yourself, or if you are a part of a family, you must have emergency fund savings.
Before you make any other plans to purchase any items or pay off debt, you must save money into an emergency fund.
The emergency fund can be the difference between going completely broke and being able to deal with missing a few paychecks. Set aside money for an emergency fund starting now.
What is an Emergency Fund?
Emergency Fund
An emergency fund is just as it sounds. It is a fund that the family has saved in the event that an emergency happens.
It is important to remember that this fund is to be used in the event of emergencies only.
For ordinary expenses or times where you want money but have not planned for it, the emergency fund should not be touched.
Normal savings for items that you may wish to have should go into another account.
Where to Keep the Emergency Fund?
Emergency funds should always be liquid. Though it can be tempting to invest money that is just “sitting there” having a liquid fund is what will help you in the emergency.
If your pipes burst in your home and the house begins to flood, having to wait to cash out your stocks for seven days will not be an aid in any way.
The emergency fund should preferably be kept in a savings account or checking account that is untouched.
Placing your emergency funds into a high-interest investment account which is also tax-free is the best idea.
This will help you in making sustainable investments month after month for a long period of time.
Author Bio:
Daniel Hanson is a professional trader who specializes in trading cryptocurrencies at Neuer Capital. As a trader, Smith enjoys writing about his experiences and offering helpful tips for others.
