The Importance of Emergency Funds with Miranda Marquit
- Written by Candice Elliott
Personal finance writer Miranda Marquit will explain what an emergency fund is and why it’s vital to have one.
Miranda began her career as a science writer after graduating from Syracuse University but eventually found her niche writing on personal finance.
Now that we’re in a temporary economy where thirty year jobs followed by a pension are a thing of the past, an emergency fund is more important than ever. An emergency fund provides peace of mind should you lose your job or face a situation as mundane but urgent as your refrigerator, carefully packed with your week’s worth of pre-made lunches, dying.
An emergency fund insures against life's unexpected expenses.Tweet This
How much should be in your emergency fund? The rule of thumb is six months of expenses. This may seem daunting but it’s important to consider two things. First of all, utilize the resources that are available to you such as unemployment benefits, food pantries, and charitable organizations. Secondly, if you lose your job tomorrow, you aren’t going to continue to live the same lifestyle. You’ll cut the cable, the daily Starbucks habit etc. So the amount you are spending monthly while working can be shaved down should a job loss happen.
How do you start an emergency fund? A little at a time, the same way you tackle any project. If you’re using Mint, and you should be, you can find areas to cut that will allow you to grow your cash cushion, Trade Mark Matt, faster.
Where should you keep your fund? Miranda reinforces what Andrew has taught us. The majority of your fund should be invested. As it can take about a week to access this money, three weeks expenses in a high yield savings account is a safe bet. If there is a bigger expense, sell the stocks that have been performing poorly so you have the cash and the tax break.
We hope that this episode and Miranda’s expertise will encourage you to start your emergency fund today.
Miranda Marquit Miranda’s personal site
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