Who should save for emergencies?
You.
Imagine this: you’re having a pool day with your friends. You are near the edge of the pool taking photos and suddenly your phone slips out of your hands toward the water.
A relatable and scary moment, right?
As your phone is about to enter the water, along with all your photos, contacts, messages, and apps, the lifeguard quickly uses a net to rescue your phone. Phew. That net saved you a lot of money you didn’t know you needed (along with your memories and messages).
Where to put emergency savings?
Emergency savings is kind of like a safety net for your money and can help you prepare for life’s unpredictable and expensive moments. Be your own lifeguard and plan ahead to help you from relying on loans or using credit cards that could plunge you into debt.
Most people keep this money in a savings account or cash management account so that it’s kept liquid, which means you can get it easily. It’s also smart to keep it separated from your other savings and investments, so that you aren’t tempted to use it.
How much should you save for emergencies?
As a general rule, adults should start by saving $1,000 for expenses and then aim for 3-6 months’ worth of essential expenses. Whether you’re a student or young adult, you may not yet need that same cash cushion. So, plan for what’s comfortable and makes sense for you.
And don’t worry if it seems difficult, start small by putting a little aside each week—even just a few dollars can add up quickly. Before you know it, you’ll have a safety net ready to go, and you won’t worry about the cost to replace your phone the next time you’re at a pool.
