2016 Resolution: Build an Emergency Fund

Happy New Year!

If one of your 2016 resolutions was to get your finances in order, you'll want to bookmark our blog. All year long, we'll be talking about ways to save money and get on track.

Today, we are looking at Emergency Funds.

Why an Emergency Fund?
Simply put, life is unpredictable. An emergency is a life-changing event you cannot plan -- like a hospitalization or job loss. Consider your absolute necessities – the things you can’t live without. If you depend on your car to get to work, or you have a monthly mortgage -- you'll need to save enough to cover those things in the event of an accident or job loss.

How Much Do You Need?
It depends on your financial situation. Most experts recommend having three to six months’ worth of living expenses set aside.

How Do You Save?
Set aside money each paycheck, just like you would to pay your bills. Consider an emergency fund as essential as your other expenses.

What Else Should I Consider?
With a bigger family comes a bigger budget. When you have kids, there’s greater risk of an emergency popping up. You might consider saving an additional amount for every dependent you have.

Just like an emergency fund, insurance is meant to cover the unexpected. If you have a growing family or business, purchase a house or new car, consider consulting your agent to discuss upping your insurance coverage. You'll pay a higher premium, but the peace of mind could be worth it!

Source: U.S. News and World Report, 11 Ways to Boost Your Emergency Fund | Time, Why Do I Need an Emergency Fund, and How Much.

Photo credits: Stock Monkey, 3D Emergency Fund | Lending Memo, Emergency Fund.