The Importance of An Emergency Fund

Saving money for a rainy day is advice most of us are given from a young age, but as the cost of living skyrockets, affording basic necessities—let alone putting money into an emergency account—often feels easier said than done. Emergencies are an inevitable part of life though, and by following some simple tips, you can make sure an unanticipated expense doesn’t derail your finances.

Start small

According to financial professionals, an emergency fund, or a savings account dedicated to covering anything from an unforeseen car repair to loss of income, should contain enough money to cover your basic needs (housing, groceries, utilities, etc.) for anywhere from three to 12 months. The idea of saving that amount of money can be very intimidating, but even if you start out by putting $5 or $10 dollars aside each week, it can quickly add up.

“The best tip for building an emergency fund is to pay the fund when you get paid,” says Steve Brumleve, a universal banker and team lead with Town and Country Bank. “Whether that’s $20 a month or $200 a month, always pay (your emergency fund) as if it’s an expense.”

Brumleve notes that housing an emergency fund in a savings account is also helpful.

“A savings account is best suited for an emergency fund since it earns interest and you hopefully aren’t touching it,” he says.

Contribute more when possible

Did you accrue some overtime pay last week? Was your tax refund this year larger than usual? While it may be tempting to use that extra money toward a weekend trip of a larger entertainment system, by using those funds to pad your emergency account, you’ll be granting yourself more financial security in the event of a large medical bill or home repair.

Think outside the box

Emergency fund contributions don’t always have to come from your paycheck or tax refund. Sometimes, they can simply come by re-examining your budget and finding areas where you could save money, such as cutting cable, taking your lunch to work instead of cruising through a drive-thru, making and sticking to a grocery list in order to minimize food waste and collecting spare change.

Cutting back may seem daunting, but with 45 percent of Americans admitting they do not have enough savings to cover at least three months of living expenses, according to a 2018 report by the Center for Financial Services Innovation, building an emergency fund is more important than ever.

Let your bank help you

Having the discipline to put aside money from each paycheck can be challenging, but the friendly and knowledgeable staff at Town and Country Bank can help.

“We offer savings accounts of various types and we can set up automatic funds transfers to help fund the (emergency) account at set times during the month,” says Brumleve. “Our online platform is (also) a great tool to use not only to transfer money to the emergency fund, but we also have a budgeting feature…to help customers gauge their income versus their expenses and what they are spending their money on.”

Emergencies happen when you least expect them, but by planning ahead and getting into the habit of putting money aside, you can be better prepared for whatever financial curveballs are thrown at you.

For more information on budgeting or creating an emergency fund, visit TownandCountryBank.com or call 1-866-787-3100.