Do You Have Your Emergency Fund Set Up?

With the economy acting the way it is and the stock market moving like a roller-coaster, Americans are taking a second look at their finances. If you haven't stopped to do a check-up on where you stand financially, now might be the time. Pull out those bank statements and give them a good look, see where you can cut down spending and start building an emergency fund.

Let's start with the different kinds of emergency funds are. Some people consider an emergency fund to be money hidden in a bank account that they never touch. Another kind would be to keep cash on hand in a fireproof vault. My current suggestion would be cash in a fireproof vault. Banks have been closing and the stock markets are not reliable, if there is a sudden crash then there would be a run on the banks and you would have a hard time getting your cash. Keeping cash on hand does not mean keeping your life savings but it does mean keeping enough to live off of for a little while.

To start an emergency fund does not require you to pull out a couple grand from your bank and invest in a huge vault for your home. Start off small and build up if you are comfortable. Depending on your weekly or bi-weekly pay check, it would be a good idea to pull out $100 to $200 a week and set it aside. If you are paying off debt, do not give up on that to start and emergency fund. If you have to, start with $20 or $50 dollars a week. Like I said, this is not something you have to jump into head first.

If you already have an emergency fund, great! You are ahead of the game but do not get lazy with it and stop saving. Right now, it is a good idea to take a look at your accounts and see what kind of crunch you would be in if you lost your job or if your bank closed. Figure out how much you spend per week, see what is optional then compare what you would HAVE to spend per week to the amount that you have in the emergency fund. This way you can see how many weeks your emergency fund would last you. Is it enough? Would it give you enough time to find another job?

Sometimes it is better to be frugal so that you can live better in the long run. Consider eating out less and taking the money that you would have spent and put it into your emergency fund. Instead of going to the movies, rent a movie or watch one that you already have, and put the saved money in to your emergency fund.

Do not be caught off-guard if something goes wrong in the stock market or economy. Use your knowledge and be prepared. Good luck with your emergency fund!