What's an Emergency Fund? (+ Why You  Need One)

First thing’s first: an emergency fund is money specifically and exclusively set aside in case of emergency. It’s not play money, it’s not touchable if you’re strapped for cash – it’s FOR. EMERGENCIES. ONLY.

Now, I get it. Life ain't cheap. Most of us are worried about not having ENOUGH money, not what to do with extra cash floating around. But an emergency fund is important and can impact things you might not be thinking about right now.

So, why do you  need one?

NOT HAVING A SAVINGS CAN INCREASE DEBT. In a poll done by Lexington Law, 3 out of 10 people said they wouldn't be able to pay for an unexpected bill of $2000+. And 37% said a medical bill of $100+ would put them into debt. Which means you're just starting to rack up debt you can't pay off.

NOT HAVING A SAVINGS CAN INCREASE YOUR LIKELIHOOD OF MAKING LATE PAYMENTS. In addition to taking on more debt, making late payments can negatively impact your credit score.

YOU NEVER KNOW WHEN YOU'LL NEED IT. Emergencies by nature aren't something you can plan for. They come up unexpectedly. And emergencies by nature are also typically something bad. You'll have more luck in this bad situation if you have money in the bank to help cover.

Now that you know why you need one, let's talk about building one. See the blog post for more information.

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