Your Emergency Fund: Everything You Need to Know

Posted April 20, 2020 by in Lifestyle
piggy bank

Emergency funds are one of the smartest things you can have for yourself and your family. If there is an unforeseen breakdown, you can pay for it. If you lose your job, you can cover costs. Emergency funds are financial buffers to keep you afloat in the worst of times. 

Yet, not many Americans have savings. Over 53% of Americans don’t have any emergency savings, and many more don’t have enough to be worthwhile. This puts you at risk of financial ruin should the slightest problem arise. 

That being said, saving blindly isn’t very useful either. Knowing your options and how to best invest your savings is so important when it comes to your financial buffer, so follow this guide and learn everything you need to know: 

emergency fund

You Can Do More with Your Savings 

Keeping your money in an account where you don’t see any interest on your savings is a waste. Your emergency fund is a last-case resort, so invest that money in a blue-chip stock that is steady, though its gains are slow. Your bank will be happy to do this, and you can even access the money when you need it. Over time this will compound your savings and give you more than you put in. 

Your Emergency Savings Don’t Need to be in Cash 

You can take money through title loans as well, meaning you have an emergency savings fund even if you don’t have any money in your account. So long as you own a car or a home, you can take out money from these assets. With cars, you can borrow up to 50% of your vehicle’s value through and still be allowed to drive. Pay it back in a month up to a year, so that you can spread the cost over time. 

You Have More Money Than You Realize 

The moment you are in debt, which many Americans are, you are at a loss. Not just because you owe money, but because you owe interest. This interest is the real killer, which is why you need to be on top of your debts. Try to shrink them as much as possible, and even consolidate them if you have multiple credit card debt. 

This way, you can keep your interest rate low and your repayments simple. You can also benefit from a credit bump from paying off all your debt at once if you are smart about it. When you improve your credit further, renegotiate any loan you have to get a better interest rate deal. This will free up more money that you can then put into your savings. 

There Are Usually Financing Options 

Finally, if you need to dip into your emergency savings for an emergency fix or replacement, remember there are often financing options. Most people are in your position, and that boiler company knows this. Ask for any financing options before you sign your check or take out emergency cash to cover the cost. This will help reduce upfront payments and help you spread out the cost within your budget. 

Do you have an emergency fund? Let us know in the comments below!