| You're probably familiar with Murphy's Law: | | | | like AFLAC. This can help pay some bills while |
| "Whatever can go wrong, will go wrong." It rears | | | | you're out of work. |
| its ugly head when we least expect it. That's | | | | Where should I put it? |
| probably why it's called a law, not a theory. When | | | | Your emergency fund should be stashed |
| it comes to personal finances, old Murphy really | | | | somewhere safe and easily accessible. No, not |
| seems to know when to pile it on. Unexpected | | | | under your mattress. We're talking an account |
| expenses and changes in your financial outlook are | | | | with liquidity, meaning you can turn that savings |
| not a matter of "if", but "when". But all is not lost | | | | into cold, hard cash quickly. Checking accounts, |
| however, with a little prior planning, you can be | | | | savings accounts or money market accounts are |
| prepared for when Murphy comes knocking. | | | | just a few options to look into, though each offer |
| It's a great idea to always have a backup plan, | | | | different advantages and disadvantages. |
| especially when it comes to finances. When times | | | | Checking accounts offer little to no interest gain |
| of crisis hit, you'll need an emergency fund to fall | | | | on your savings, and many of them come with |
| back on. Some cash set aside to deal with life's | | | | monthly fees. Savings accounts are a good option |
| little (or big) detours. | | | | as they can provide a small return on your |
| How Much? | | | | savings and probably won't charge a fee, but you |
| That depends, really. What kind of lifestyle do you | | | | may incur a penalty if you withdraw a large |
| lead and how much will it costs to maintain that | | | | amount. A money market account is a viable |
| lifestyle if you're out of work? Most experts | | | | option as it will probably feature a higher interest |
| recommend you save a minimum of three | | | | yield than both a savings and checking account, |
| months worth of basic expenses. Figure out your | | | | but your money might be a little more difficult to |
| monthly budget (you do have a budget, don't | | | | get to. |
| you?), subtract expenses you can live without, | | | | You can also go with a Certificate of Deposit |
| then multiply it by the amount of time you think | | | | (CD). This will give you the highest return for your |
| you'll need the fund to rely on. | | | | money, though most CDs require a large amount |
| Keep in mind, three months contingency money | | | | to open and you have access to the money only |
| should be an absolute minimum. If you're single | | | | when it matures; cashing out before that date will |
| and have no dependents, the amount is going to | | | | result in stiff fines. That's not going to help when |
| be significantly less than if you're married and | | | | you're already hard up for money. |
| have three kids. The more people you're financially | | | | Whatever method of savings you choose, make |
| responsible for, the more money you should plan | | | | sure your emergency fund is somewhere where |
| on socking away in this fund. If you have | | | | you won't be tempted to dip into it. Mixing your |
| dependents, look to save at least six month's | | | | must-have emergency cash with your "saving for |
| worth of expenses. | | | | a speedboat" account is probably not the best |
| To soften the blow should hard times arrive, look | | | | idea. |
| into short-term and long-term disability insurance | | | | |