BUILDING AN EMERGENCY FUND

Many Americans live paycheck to paycheck with no funds available in the event of an emergency. One of your first financial goals should be building a cash reserve, or emergency fund. Your emergency fund will allow you to tap into your cash reserves instead of paying with credit cards or selling your assets.

How Much Money To Save:

Your emergency fund should contain 3 to 6 months of living expenses. It's not just 3 to 6 months of your take home pay. It's enough to cover your expenses - mortgage or rent, debt repayment, food, and car payment - for 3 to 6 months. Your circumstances will dictate how much cash you need in reserve.

Where To Put Your Money:

Follow these two recommendations about where to put your emergency fund:

• It should be in an account where it will not lose value.
• It should be easy to access.

Regular savings accounts and money market accounts are the best places to keep emergency funds. Whichever account type you choose, be sure it has no maintenance fees. It's wise to put your emergency funds in an account separate from your everyday savings.

Once your emergency account is fully funded, consider putting a portion of it in a savings certificate that will earn a better rate. Choose a shorter term of deposit, so the funds remain accessible.

When To Use It:

Once you have cash reserves in place, when is the right time to use them? Examples of emergencies might be:

• Medical expenses
• Temporary layoff or transition between jobs
• Unexpected car or home repairs

Remember, if you have to tap into your emergency fund, repay it as quickly as you can.

For more information about savings options at Virginia Credit Union, and how we can help you make financial progress, please contact us.