The Importance of Having an Emergency Fund

An emergency fund is essentially extra money set aside to use if something unexpected were to happen, such as losing your job, car repairs or medical expenses. This money will allow you to live without an income for a few months if you were to lose your job, or if something unexpected comes up that will cost a large chunk of money to cover.

Those who have emergency funds and had an unseen emergency happen, can probably tell you how happy they were, or on the other hand, how difficult it was to find a way to cover the expenses incurred. It’s estimated that 28% of Americans don’t have an emergency fund in place.

The size of your emergency fund is completely up to you and shouldn’t hurt your monthly budget. Most people say that it should be around 3 to 6 months' of your salary. For example, having this 3 to 6 months salary set aside can help if you were to lose your job. While others say it should be less as it is better to invest more money and grow your wealth. Just think of putting the money aside each month as paying an insurance company. This money can then be accessed quickly and easily if something unexpected were to happen.

Learn more about Pioneers savings products to start your emergency fund today.