Emergencies, by their very nature, are unpredictable and can strike when you least expect them. Whether it's a car accident, a flooded basement, or a sudden job loss, these events are beyond your immediate control and can have significant negative financial implications. However, an emergency savings fund can provide a sense of relief and security, knowing you have a financial cushion to fall back on.
There are numerous ways to finance your emergency savings fund, each serving the same vital purpose of providing a safety net in times of crisis. These funds should be kept separate from your regular savings accounts to cater for unexpected events. Explore Bank of Vernon's advice on when, where, why, and how to establish a secure emergency savings fund.
When Should I Start Saving?
The general standard is to have three to six months' worth of all living expenses in your emergency savings fund. The final amount will be different for each person.
- First: Identify your fixed monthly expenses.
- Next: Determine how many months your emergency savings fund will cover.
- Then: Estimate how long you would like to take to reach your savings fund goal.
- Finally: Determine a monthly payment to help you reach your goal in the desired time.
Where Should I Keep My Cash?
Bank of Vernon offers additional savings options that are separate from your regular savings account. These flexible options can help build your savings and earn more interest the more money you put into the account. Storing emergency savings fund money in a different account can help avoid dipping into it. Explore the choices available to you from Bank of Vernon:
- Money Market Account: This account functions as a combination of a checking and savings account. It lets you move funds to your primary bank account to utilize your debit card. Interest rates for this account are higher than those of regular savings accounts.
- Certificates of Deposit (CDs): If you are worried you may dip into your savings fund, this option is excellent. The money you deposit into the account will accrue interest for several months. You cannot touch the money in that account without a financial penalty until a particular time has ended. Interest rates are higher than those of regular savings accounts.
These alternative savings account options will help ensure maximum emergency savings and greatly benefit you long-term. They will also help you to use the funds when necessary and steer you away from using these hard-earned savings for recreational purposes, giving you a positive outlook on your financial future.
Why Use One of These Accounts?
Seeing total savings can be a great incentive and provide reassurance when visualizing where your emergency savings fund can be. Bank of Vernon offers financial calculators, like our Emergency Savings Calculator, Savings Calculator, and Certificate of Deposit Calculator, to help you understand total savings over time for each account. Using these resources is a helpful way to see the differences between each account and decide which one is right for you.
How Else Can I Save?
Check out these options to get creative with your finances.
- Save automatically: Set aside a certain amount for every paycheck and use direct deposit to have your earnings go into your emergency savings fund account. With our online and mobile banking, you can check the status of your accounts quickly and easily, giving you peace of mind and control over your finances.
- Cook your meals instead of ordering in: A quick and easy fast food delivery or a restaurant may be tempting after a long day. But meal prepping for the week or cooking homemade meals can help you save, and your emergency savings fund will thank you later.
- Make coffee at home: Buying a coffee every day may seem small, but it can add up over time. Try brewing your coffee at home and putting aside the money you spent at your favorite coffee shop!
- Sell clothing and items: You can sell clothes that have been sitting in your closet and clear out your space at the same time. Many online places are great for selling furniture, kitchenware, and other items. Put the proceeds from this into your savings account.
- Get a Bank of Vernon Credit Card with Cash Back Rewards: Our credit card gives you a percentage back of the cash you spend. It's a perfect option for spending and earning while improving your credit score. You can add those cash-back savings to your emergency savings fund.
Emergency savings funds are an essential way to prepare for the unexpected. They are a security net for the future and prevent incurring credit card debt and, consequently, bad credit. The strategies and accounts above will help you get into the habit of saving, provide peace of mind, and set you up for financial success. Contact us or visit one of our locations in Alabama and Mississippi to get started with your emergency savings fund.
Bank of Vernon is a full-service Community Development Financial Institution with locations in Mississippi and Alabama.