Not everyone is into saving, and that is ok. Not everything is for everyone at the stage of their lives they are in today. However, no matter what financial goals you have in place, you need to be prepared for the worst. Anything can happen at any moment. Most things are slight inconveniences, and some come with hefty payments. Even if you don’t have a savings account for retirement, you need an emergency one. If you don’t have one, this is your sign to start your emergency fund NOW!
Setting Up The Account
Before setting up your account, you need to think long and hard about the advantages of such an account and for what instances you may dip into it. I find setting ground rules early on will keep your hands out of the pot when it is not warranted. It will also ensure accountability. I like to use high-yield savings accounts for my emergency fund. They are easy to access, and you earn cash back monthly as interest payments for holding your money in the account. Rates for high-yield savings accounts are up to 2.15% right now.
Funding The Account
How much money you should funnel towards emergency savings is dependent on you. In formulating this number, think about all your monthly income, how much you need to pay the basic necessities and bills in your home, and how long you want your money to last. My account is set up to sustain me for more than a year should I need it. I also keep my spending low through the year and can live on less. Once you have figured out how much you want the account to hold, start making automatic transfers from your regular bank into this account. Set it on auto draft so you can save it without thinking.
Limiting Your Access
Once your money starts building up, there’s going to be some temptation to pull it out. Don’t! It’s for an emergency, not every slight inconvenience that happens in your life. Make do with what you have before dipping into the account. If you have minimal self-control, make it harder to access funds by not requesting a bank card. You can also switch to a bank that only allows transfers at a certain time or after a few days, like with brokerage accounts.
It’s okay if you do not budget or prioritize savings. It’s not for everyone, but you should be saving for emergencies. Do so in a high-yield savings account, and I bet you will thank yourself later.
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Shatel Huntley has a Bachelor’s degree in Criminal Justice from Georgia State University. In her spare time, she works with special needs adults and travels the world. Her interests include traveling to off the beaten path destinations, shopping, couponing, and saving.