Why You Should Have an Emergency Fund and How You Can Build Yours on Autopilot
I never knew the importance of having an emergency fund until several months back when I lost my job. I was approaching the last few months of my lease and preparing for a huge move. I immediately thought, “How am I going to pay the rest of my bills on top of moving to another state?!” Then I had calmly remembered that I had extra money to fall back on in my emergency fund account.
This is the exact purpose of an emergency fund account. It’s there to support you when life throws you unexpected curveballs. You never know what’s going to happen. That’s why it’s best to not put all your eggs into one basket. Accord to Money magazine, 78% of us will have at least one major financial crisis in any given 10 year period. The best way to be prepared is to make sure that you establish a solid emergency fund.
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According to faith-based money guru, Dave Ramsey, if you’re single or have an one income family, a good rule of thumb is to reserve three to six months of your paycheck for your emergency fund. Start off by aiming to save $500 to $1,000. For those who may have had a consistent job for quite some time, he recommended starting off with an emergency fund equivalent to three months of income.
An emergency fund should be accessible, but at the same time shouldn’t be easy to tap into. Dave suggests that before you deem the Nordstrom Anniversary Sale as an “emergency,” ask yourself the following questions:
1) Is it unexpected?
2) Is it necessary?
3) Is it urgent?
Truthfully answering these questions is the best way to determine if you’re financial situation best qualifies as an emergency.
I know that consistently setting aside money to save is a struggle in itself, which is why I prefer tools that will minimize the possibility of me forgetting (or making the excuse) to not save. That is why I use Digit for my emergency fund. Digit builds my emergency fund on autopilot by transferring money every two to three days from my checking account into an FDIC approved savings account, and it never saves what you can’t afford. You can access your savings account at any time. Just send Digit a text and the app will transfer your money back to your checking account by the next business day. The best thing about the app is that it’s absolutely free, requires no minimums, it will never overdraft your account, and it allows unlimited transfers.
This is by no way a sponsored post. I’ve been actively using Digit for about a month and it’s already saved me about $60! It’s a great app if you hate the idea of manually transferring your money or taking a set percentage out of your check every pay day. It’s also great if your income fluctuates every check, because Digit knows what best to save based on your income and spending habits. Start building your emergency fund on autopilot by downloading Digit today.
It’s important to cover your bases by preparing for life’s unexpected surprises. Give yourself stability and peace of mind by setting your emergency fund on autopilot today.
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