How safe would you feel if you lost your job or incurred a costly new expense? Would you have any reserve money to keep you afloat? That reserve money, or your “emergency fund”, is very important to have.

An emergency fund is money that has been set aside to cover surprise expenses. It gives you a safety net in the event you run into a difficult financial situation. If you lose your job, or another financial pitfall arises, your emergency fund can save you from having to dip into other sources, like your 401K or a college fund.

It is a good rule of thumb to try to save at least three month’s salary in your emergency fund. If you are budgeting correctly, this should help you to cover living expenses for a few months.

As is the case with all of your finances, having a solid plan in place is essential.

Some ideas for getting started:

  • + Look at your current spending habits and see if there is anywhere you can cut back.
  • + Opening a special savings account for this purpose and transferring small amounts periodically will help you incrementally build up an emergency fund over time.
  • + Create a goal to save a specific amount of money each month.

It is important to remember that this money is being put towards an EMERGENCY fund. It can be very tempting to access savings prematurely, but keeping it set aside will provide more security and peace of mind.

  • + Create a list of situations where you feel it is acceptable to withdraw from an emergency fund, then stick to it!
  • + Ask yourself if this situation is REALLY an emergency. The fund is there to prevent you from dipping into accounts set aside for other purposes in a time of dire need.

It may be difficult to start an emergency fund, but it is worth it in the long run. Having an emergency fund can help you in the event that unforeseen circumstances lead to a new expenditure. First Bank encourages everyone to have an emergency fund, as your financial security should be top priority!

For more information about opening an account, call your local First Bank branch today!

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