I hope you have one!

Your emergency fund can be used for various purposes such as reducing debt, buying large households items (refrigerator etc), making house repairs or even making a down payment forpurchasing a house.

The question then comes to mind:  How much should you save? Should it be %, 5% or more? Well the best amount should be around 10 – 15% of your income to make it worthwhile. In fact your emergency fund should have no less than 6 months of living expenses save. With such a nest egg you can do quite a lot

Remember now that this is an “emergency” fund and should not be used for buying the basic essentials unless you have lost your job. If you do need to use from this fund make sure that you put the money back.

Some people may recommend that you have 2 funds – one for genuine emergencies and another for house repairs and purchses. Now this makes a lot of sense since as a home owner I know how much money you can spend yearly on house repairs. In the same way an elderly human needs to consider their health and in some cases the medical bills are higer, so too do a house need attention as it ages. You will find that the repair bill increases, since a new roof may be required after 15 years or more. Keeping these things in mind you should then consider how much you need to save for future house repairs.  If your roof needs changing in 5 years and you save $100 per month for that period then you would have save $6000 toward repair.

Planning for future repairs can reduce the stress that you may endure when the unexpected occurs. It is not too late to start today toward this or any other emergency fund.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Tags: emergency fund, frugal living tips
Filed under: Frugal Tips