“Financial Experts” recommend that the average person should save 6 months of earned income into an emergency fund. An emergency fund can be left in a high interest savings account, money market funds or even a saftey deposit box. Where you hold your emergency money should be very low risk as this money should be used as a last resort. Here are some examples of things where a person might need to dip into this fund:

-Medical Bills

-Natural Disasters

-Loss of Job

- Recession

- Having to take care of a loved one

These are just a few of the things that your emergency fund can bail you out of.

Saving six months income is quite a daunting task for anyone. Each individual will vary on the length of time it would take to invest into a emergency fund, but for most of us 6 months income…WOW! What I suggest for those that can’t afford the 6 months income emergency savings is that they budget a small amount of money for this fund in a money market or GIC account. This way you can eventually work your way up slowly for this nest egg emergency fund.

In the mean time, get a line of credit from your bank this will only be used in emergencies, no other time. You never want to bombard yourself with bad consumer debt but if you are in the situation where it could be life or death ,this is a great option. Lines of credit are much lower interest than a credit card and if you have online banking this can be paid off instantly with a transfer of funds.

Another thing to look into if you have credit card debt is “insurance”. Visa and Mastercard offer insurance and their costs are very very minimal. In the case of accident where you are unable to work, they will help you with your balance and payments. This is a great insurance to have and is a must for anyone carrying any amount of credit card debt.

If you do run into an emergency call your bank about payments you might owe them and explain your situation, this will definitely help. Banks want your business and don’t want anything happening to their customers. People are their biggest asset and if you can make some sort of deal with them they will definitely be as greatful as you are.

There is more to emergency funds than just cash in a bank account. Make sure you have covered all your bases just in case! If the emergency money is there it can save your credit rating, home, relationships, even your life.

Kelly Parks
www.wealthforinvestors.com