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Planning for Emergencies

1) Emergency Fund – It’s difficult to plan for something unexpected. However, the rule of thumb is to save enough to cover three to six months of living expenses. If you can, saving more than six months is encouraged so that you can make more payments. The best way to save for an emergency fund if you do not have the extra cash, is to include it in your monthly budget.

2) Insurance – It’s frightening when an emergency occurs and you suddenly have extra expenses. If you have reliable insurance, they can take some of that stress off your shoulders. Make sure you understand what your medical, auto & homeowner’s insurance covers so that you know what will be covered partially and what will be covered fully. It is also a good idea to consider disability and life insurance.

3) Budgeting – Including emergency savings in your budget is extremely important. You must have a good understanding of your financial situation to determine your budget. Know your household income and expenses. From there you should be able to understand how much you can put towards an emergency plan without creating a financial burden for you or your family.

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