What Is An Emergency Fund? And Why Should I Have One?

shutterstock 21769855 Custom 267x300 What Is An Emergency Fund? And Why Should I Have One?Many people have an emergency fund just in case of well an emergency. Now the reasons that many people have an emergency fund are because they are just planning for any uncertainties in the future.
You see while you can never really know when something is going to take place. You can actual still in a way prepare for it. This is really what an emergency fund is. You will have put together a solid plan that can help you out in a time when you and your family are hit tough by a financial hardship.
The idea behind a person having an emergency fund is to cover the major expenditures such as your mortgage or rent and other essential bills. Think of it as some kind of safety net that you have there just in case something terrible does happen.
You are probably wondering just how much exactly you should have in your emergency fund. Well truth be told there is no real right or wrong answer, but you do want to have enough in there to help you out for say at least a month if things do get real tough. Some people even will hide enough away to cover them for over a year. I know this may seem a little excessive and is probably out of the question for most families out there, but some people do actually put away that much.
One other thing that is really important when planning an emergency fund is where you are going to store the money. Remember you are not trying to make money on interest here. The idea is that you can get to the money as soon as you need it. So you do not want to put it into some complicated bank account that is going to take a while to get the money out of.
Nope you want to make sure that you are putting your money in a place where you can have instant access. I am not saying that you need to start storing wads of cash around your house, but aging this is not unheard of. Just use a regular old bank account that lets you add or take as much as you want when you want.
We can never know when a accident is going to happen, but by having an emergency fund we can at least prepare for the financial fall out.

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