Develop Good Saving Strategies
A savings account is a safety net for your financial life. If you experience a loss of income or paycheck reduction, your savings can come in handy to help pay your bills and cover unforeseen expenses such as a car repair or medical issue. Plus, if you’re a homeowner, an emergency savings account can help you avoid home foreclosure.
Build a Savings Plan
A good rule of thumb is to save three to six months’ worth of living expenses. You can work towards this milestone by deciding to “pay yourself first.” This means committing a certain amount or percentage of your monthly income to your designated emergency savings account. Your emergency savings account should be separate from other accounts and not touched unless you need it for emergencies like a job loss, a reduction in household income, unpaid medical leave or an unexpected car repair.
You can build this account over time, but remember the more you save each month, the faster you can reach your goal and save for other priorities. Utilizing direct deposit through your employer or an automatic money transfer every month are two common ways to build up your emergency fund.
Other ways to build your emergency fund include:
- Starting a Spending and Savings Plan
- Connecting with others who support your savings goals
- Paying down debt so you have more to save
Want to know more about emergency accounts and how to save?
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