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After all, its a matter of when not if unexpected expenses will come up.
But how do you know which emergencies you should cover out of your emergency fund?
If you dip into the fund too often, the money wont be there when you really need it.
How Much Should You Save in Your Emergency Fund?
Experts often recommend putting three to six months worth of expenses in your fund.
To calculate your savings goal with this guideline, list all of your essential monthly expenses.
These may include:
For variable expenses like groceries, estimate how much you spend each month.
Then, multiply your total essential expenses by three and six.
Tailor your emergency fund savings goal to your income and comfort level.
When To Use Your Emergency Fund
Everyone eventually faces unexpected expenses or financial hardships.
Here are some circumstances when dipping into your emergency fund is worthwhile.
Thats what your emergency fund is for.
Use your emergency fund for those medical bills.
Use your emergency fund to cover the repair costs if something goes wrong and needs fixing.
The moneys right there, waiting to be used, right?
An emergency fund is specifically there to coverunexpected financial emergencies.
You should create a separate plan for repaying your debt with your monthly income instead of your emergency fund.
To Pay For Home Renovations
While home repairs can be essential, home renovations arent.
But saving for emergencies is a more pressing concern.
Dont use your emergency fund savings to invest.
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