| "There are plenty of ways to get ahead. The first | | | | about ten grand. Take a deep breath! You do not |
| is so basic I'm almost embarrassed to say it: | | | | have to save this money over night! You may be |
| spend less than you earn." -Paul Clitheroe | | | | asking yourself, "do you I need to put away that |
| An emergency fund is extremely important for | | | | much money?" and the answer is yes. What |
| your family and yourself. Unlike the luxuries we | | | | happens if your car breaks and you can not get |
| often splurge on, an emergency fund can make | | | | to work? What if you need a new roof? Or your |
| the difference between foreclosure and keeping | | | | wife needs emergency medical care? Do you |
| your house. Most financial advisors suggest that | | | | have the money today to pay for this important |
| an emergency fund should have enough money in | | | | yet unexpected expenses? Start with figuring out |
| it to cover at least 3 months of household | | | | your monthly expenses and multiplying it by 3. |
| expenses. However, six months of expenses is | | | | Three months should be your first goal and is a |
| even better. Currently, you may wonder why on | | | | little easier to achieve. This is how much money |
| earth you would need save 6 months of | | | | you will need to save and it should be close to |
| expenses. However life can throw you some | | | | 65% of your net income each month. For a five |
| curve balls. Unemployment, unexpected medical | | | | year plan the average consumer will have to place |
| bills, natural disasters or an auto accident are all | | | | just under $170 dollars a month into a savings |
| events that no one can predict and that can | | | | account. For a 30 month plan, 2 ½ years, |
| cause you, to not be able to work. Your first | | | | you would need to save just under $340 dollars |
| step in building an emergency plan is finding out | | | | per month. Emergency fund money should be |
| how much money you will need to put into your | | | | place in a high yield money market account. Make |
| fund. | | | | sure you can draw checks or use a debit card on |
| The yearly expenses of an average consumer | | | | the account in case of an emergency. This |
| are estimated at $40,000. Individual expenses | | | | money should not be touched under any |
| may vary and emergency funds should be | | | | circumstance. No matter how badly you want |
| customized to your situation. For a family that has | | | | those high shoes or that big screen television. An |
| $40,000 dollars in yearly expenses, an emergency | | | | emergency fund can be your lifeline especially if |
| fund of $20,000 dollars is recommended. | | | | you are out of work. Do not underestimate the |
| Overwhelmed? Yes that is a huge amount of | | | | power of saving and the value of preparedness. |
| money and even at 3 months, we are still talking | | | | |