Creating an Emergency Fund
If you needed to come up with $400 today to pay for something that affects your everyday life – think the transmission dies on your car or the pipes burst in your home – would you have the cash? Or would the quick fix need to be financed through a credit card?
Even worse, what if you lost your job or were injured and unable to work. Are you able to support yourself for a few months until you can get back on your feet? Or will the setback put you in debt that could take years to pay off?
If those situations aren’t fun for you to think about, you’re not alone. According to a 2016 PWc financial wellness survey, the top financial concern for Americans was not having enough funds set aside for emergencies. Despite this fear, less than half of Wisconsin residents have emergency money set aside equal to three months of income.
An emergency fund gives you peace of mind that if (or when) an unforeseen expense comes up, you have money set aside to pay for it without having to go into debt. The rule of thumb is to have three to six months of your usual expenses saved up to pay for the unexpected.
Financial expert Dave Ramsey says the reason for having an emergency fund is simple: You have no idea what is going to happen, so it’s best to be prepared. To learn more, reference Ramsey’s emergency fund quick guide.
It is recommended to keep your emergency funds separate from other accounts, so that they can’t accidentally be spent on non-emergencies. Consider these account types for keeping your emergency fund safe:
Super Money Market Account
Earn competitive interest on all balances of $1,500 or more
- $1,500 minimum deposit to open
- Larger balances can earn higher rates with tiered rate system
Maintain access to funds with limited check writing
iSave Account
Competitive interest earnings on entire balance
- Contribute regularly (or by direct deposit) to keep increasing your balance
Easy way to save for your goals
- Just a $25 minimum deposit to open (only required for account owners age 19+)
Low (or no) quarterly fee
- $9 quarterly fee (waived if $100 average balance is met or if account owner is under age 19)
