In this article we will talk of importance of emergency cash fund. This is some saved money that will be available for you in case of some emergency situation, and this is very important to have some money saved especially in times of tough economic situation.
Emergency situations can be different, we all may need extra money in case of healthy reasons, retirement, death of spouse, or loss of the source of income. It can actually happen to everyone. So why not insure ourselves from it.
You will also feel much saver if you know that you have some emergency fund saved for some tough times. Of course tough times may also never come, but we can’t predict our future and it will be wiser to have some extra cash saved. Almost every financial consultant will tell you that the emergency fund is the prime priority in our today’s life.
Another good reason to have an emergency fund is if you are planning to make some investment or if you are collecting money for a vocation or a trip.
However, how big should be your emergency fund? This depends on a lot of thing, such as: income, the family status and other things of particular person. And it is also depends on how much money you want to save and for what purchases you want to save this money. However, in most of the cases you will need to cut off your expenses for three or four months to save some extra money. And once you started doing it, it would be better for you not to stop even after three or four months especially if it isn’t hard for you to live on minimum expenses. And this is vey important, because health care cost growing steadily and very fast each year. I personally recommend you to with one year minimum expenses, but it might seem not very realistic for a lot of people.
There a lot of places where you can park your extra money. However, the most recommended and safe place is a saving account. It will insure you money no mater what happened to the bank. Also you can always open an online account, if it is enough comfortable for you. With saving account you will get better and higher rates and it is easy to access, because it offers you an online banking system. So you will have an opportunity to manage your money as you want right at your home. Also if you are not very comfortable with online management, they can always provide you with telephone assistance.
However, it depends on your where you are going to keep your money. I wish you to make the right choice.