You know it's important to have cash on hand in case of an emergency, but when is it okay to dip into that aptly named emergency fund? Some scenarios are so obviously emergencies - you lose your job and rent is due - but others can be iffy.
Tagged With emergency funds
A new poll from Bloomberg suggests that almost half of Americans would have a hard time affording a $100 emergency, like a speeding ticket, medical bill or other unexpected expense. Many Australians are in similar situations as well. Consider the idea that maybe this says less about people's financial habits than it does the garbage economy.
When you live paycheck-to-paycheck, you usually feel at the mercy of your employer. If you're lucky enough to have a fair, understanding employer, that might not be so bad. However, if your employer is a jerk or you just don't like your job, you probably feel powerless and stuck. Here's how an emergency fund can help with that.
An emergency fund is cash you've saved for one purpose: to help you cope with the emergencies that life hands you, without disrupting your everyday routine. It could be an accident or a health issue -- with your fund you have room to breathe. The key, however, is to leave the fund alone until you need it. Deposit your money, let it earn a little interest, and ignore the balance until an actual emergency occurs.