Life can come at you fast, but an emergency savings account can have your back when the unexpected comes knocking. Whether it’s a flat tire or surprise engagement, having a safety net can allow you to handle the bad and celebrate the good.
Why saving matters:
An emergency savings account isn’t always about expecting the worst. It can be about building a rainy-day fund, so curveballs don’t put you in precarious debt or financial situations. Confidence and stability are pillars of financial wellbeing.
How much to save:
- First milestone - $500 to cover little things
- Next - one month of expenses
- Long term goal - 3-6 months of expenses
Progress is better than perfection, so even $10 or $25 per paycheck can make a difference!
How to build your emergency fund:
- Automate savings - the easiest step towards building that buffer is to use auto transfers, so you never have to think about it.
- Treat it like a bill - if saving is a nonnegotiable part of your monthly budgeting, it will be harder to convince yourself to spend that money elsewhere.
- Round up purchases to the nearest dollar and stash the difference - there are apps to help you track and automate this. You can also go analog and do some manual math each week. The important thing is that your savings grow little by little.
- Use windfalls wisely - when you get a bonus or even a raise, continue with the budget you made before that influx of cash and put that extra money toward your savings goals.
Where to keep it:
Keep your emergency savings separate from your regular savings account. Experts recommend having a dedicated savings account for your goals. You can even have multiple if you prefer— for emergencies, for treating yourself, or for happy surprises. There are no rules except the ones you make.
When to use emergency savings:
Here’s your rule of thumb: your emergency fund is for needs, not wants. If it’s unexpected, urgent, or essential, it qualifies. If it’s something you can plan or postpone, it belongs in a different savings category.
Create separate savings accounts for things like travel, holidays, or home projects so you can enjoy those aspirations without touching your emergency fund.
You worked hard to build that buffer so protect it and make sure your spending matches your goals.
Building an emergency fund takes time. Building more savings buckets on top of that takes even longer. But every dollar is a step towards feeling financially safe and comfortable. You don’t have to have it all figured out, but being prepared can make a world of difference when a challenge or opportunity arises. An emergency savings account is more than just financial preparedness— it’s about peace of mind.
Start your emergency fund today with a Mazuma savings account.
