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Creating an Emergency Savings Plan

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bigmako

New Contributor
Jan 25, 2008
44
7
9
California
Not sure if anybody saw this, so I thought I'd post it.
I think this has some great info here!


"How to establish an easy-to-access Emergency Cash Fund to cover life's little hiccups"

1) Figure out how much cash you need each month for food, shelter, transportation, and other necessities. Bump up this number to include things like job-hunting expenses (for those of you who have a job) should you suddenly lose it. Then multiply it by three or six for the number of months you want to cover, and remember to factor in the number of people for whom you're financially responsible.

Consider including upcoming big-ticket expenses, such as an auto-insurance bill. (Or a bigscreen TV for the Superbowl)

2) Decide how much you can afford to contribute each month to meet this goal. Make this a must-pay expense.

Once you have figured out your target and contribution amounts, pick a readily accessible account that is immune to the stock market's flights of fancy. That narrows the list to checking and savings accounts, money-market funds, certificates of deposit and short-term bonds.

Though returns on your short-term savings will never rival long-term returns on stocks, emergency cash should earn its keep. Compare interest rates, yields, the cost to purchase and maintain the investment, and the minimum investment required to get you favorable rates.:coffee:
 

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Russ H

Gold Contributor
Read Millionaire Fastlane
Speedway Pass
Jul 25, 2007
6,556
1,293
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Napa Valley, CA
I was nodding my head until I got to the part about budgeting some emergency cash for buying a big screen for the Super Bowl.

:tdown:

UGH. Unemployed, trying to keep your family alive, and you allocate emergency funds for a BIG SCREEN?

Totally misconstrues the concept of an emergency fund (which we will cover in detail on the "How to Develop your PLAN" thread.

-Russ H.
 

Bilgefisher

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
1,849
287
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Aurora, Co
Emergency savings plan saved me twice during periods of unemployment. Its well worth it. I prefer 6 months of savings in the bank, but would eventually like to push that out to 1-2 years.
 

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