What Is an Emergency Fund, and When Should I Use It?
At Renasant, we understand that life happens. Sometimes things don’t go our way, and that’s okay, as long as we are prepared.
In addition to a traditional savings account, it’s important to have savings for emergencies. There’s no one-size-fits-all approach to setting aside an emergency fund, so take a look at your expenses and how an emergency fund may help you.
An emergency fund is money set aside for emergencies and other unexpected expenses. An emergency is different to each person, but a few examples of unexpected expenses might be home and vehicle repairs, medical emergencies, or loss of employment.
A good rule is to have three months of your reoccurring expenses saved into an emergency fund. Think of all your expenses over the course of a month such as:
- Mortgage or rent payments
- Vehicle and other insurance payments
- Food
- Utilities
- Gas
- Healthcare
- Other debt payments
Multiply that total by three, and that’s a good start to begin an emergency fund.
Much like building savings, emergency funds aren’t built overnight. The important thing is to start. Add up your expenses, set a goal for your emergency fund, and start working towards it.