Previous | The Big Game Predictor, go 49ers? Next | How to safeguard access to your accounts
February 06, 2020 / Christian Merritt
Everything you need to know about emergency funds

Everything you need to know about emergency funds

Having a healthy emergency fund in place is a critical component to achieving and maintaining financial stability.

Unfortunately, things happen, like medical emergencies and job loss. In events such as those, it’s crucial to have money to tap, because relying on high-interest credit cards can bury you in debt.

What is an emergency fund?

An emergency fund is money you set aside, in a bank account separate from the one you use every day, for future personal financial crises or unexpected expenses. The funds should be held in checking or savings accounts to ensure that you have quick access to money during an emergency situation.

How much money do I need to save?piggy bank with emergency funds written on it

You should have enough money saved to cover your expenses for three to six months. Here are some expenses your emergency fund should be able to cover:

  • Utilities like water, electricity and heat
  • Car payments
  • Mortgage/rent
  • Cellphone
  • Insurance
  • Food
  • Medical care
  • Other debt payments

Add up all of these expenses, plus any others, for one month and then multiply that number by three to six. Make that your target for an emergency fund.

How do I build up my emergency fund?

  1. Set a monthly goal. Regularly set aside a fixed amount of money. You can do this by earmarking a portion of your paycheck to be automatically deposited into your emergency account each month.
  2. Save your tax refund. Quickly build up your rainy-day fund by depositing your tax refund into your emergency account after you file your taxes.
  3. Slash expenses. If you don’t have enough money to save, assess areas where you can cut costs so you can stash money away. Some ideas include dining out less and nixing subscriptions and memberships you don’t use regularly.

Bottom line: Having an emergency buffer between you and major life crises can give you peace of mind and protect you from going into massive amounts of debt.

Christian Merritt is the vice president, Investment & Trust market manager for Cumberland County & Capital Region at F&M Trust.

Recent Articles
How to safeguard access to your accounts
How to safeguard access to your accounts

How to safeguard access to your accounts

July 19, 2023 / Jordan Peffer

Seven tips for buying your first house
Seven tips for buying your first house

Seven tips for buying your first house

July 12, 2023 / David Kuhns

How much do I need to save for retirement?
How much do I need to save for retirement?

How much do I need to save for retirement?

July 05, 2023 / Christian C. Merritt, III

Is bundling insurance right for me?
Is bundling insurance right for me?

Is bundling insurance right for me?

June 28, 2023 / Levi Crouse

Soft landings require skill; Is the Fed instrument-rated?
Soft landings require skill; Is the Fed instrument-rated?

Soft landings require skill; Is the Fed instrument-rated?

April 21, 2023 / Warren Hurt

50/30/20 rule helps with budgeting
50/30/20 rule helps with budgeting

50/30/20 rule helps with budgeting

April 13, 2023 / Courtney Shauf

What is Inflation?
What is Inflation?

What is Inflation?

April 07, 2023 / Joel Huffer

With recession possible, should I review my portfolio?
With recession possible, should I review my portfolio?

With recession possible, should I review my portfolio?

April 03, 2023 / The Merrill Anderson Company

Required Minimum Distributions in 2023
Required Minimum Distributions in 2023

Required Minimum Distributions in 2023

March 20, 2023 / The Merrill Anderson Company

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.