What constitutes an emergency?
You will have your own definition of an emergency. For some families, a relatively small, unexpected expense, such as a car repair or a modest medical bill, can pose a financial hardship.
A study by the Federal Reserve System in 2019 found that 40% of Americans would struggle to come up with $400 to pay for an unexpected bill. This is why having an emergency fund – before you need it – is necessary.
How to build an emergency fund
An emergency fund it basically a savings account set up for dealing with emergencies as they arise. Take a set amount each month and put it into a specific account that you will not access at any time except to pay for an emergency. If this is new to you, recognize that it may take some time to build your fund up to the amount you may need to hold for emergencies.
How much to put in your emergency fund?
There is not easy answer to how much money to have in your emergency fund – everyone is different. Some people recommend having $1000 set aside in an emergency fund while others suggest having 6-months of your expenses in your emergency fund. It is up to you, but an emergency fund is there for when unexpected things happen. Sometime it makes more sense NOT to have an emergency fund, but instead have a small amount cash in savings and pay off high interest rate debts or have money in higher yield funds that are easily accessible “in case” of emergencies.
Take a moment to jot down 5 things you consider to be an emergency expense. Keep that list and refer to it when you are tempted to withdraw funds from your emergency fund. Think…”is this on my emergency expense list?” If not, don’t use your emergency funds!
A Journey to Personal Financial Success
At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.
Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.
Becoming an MFF Fellow
Our Standards of Financial Literacy – Learning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.
Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.
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