emergency fund

Easy Steps to Building an Emergency Fund

Things break and stop working from time to time. Unfortunately that’s just one of the hidden joys of home ownership. You may not know when something may stop working, or if at all, but you’ll certainly want to be prepared in the event it does happen.

Allow me a quick disclaimer: if you want expert financial advice when it comes to saving, then you may want to discuss setting up an emergency fund with your financial planner or bank rep. As far as my post is concerned, consider some general best practices when it comes to saving.

If you’ve recently moved into your new home, you may want to consider establishing an emergency back-up fund. This should be a certain amount set aside every month as part of your “break in case of emergency” fund. I personally feel it takes anywhere from 6 – 12 months to make your house your home, whereby you’ve come to know all the items in your home that are in the clear, on the brink, or beyond repair.

A number of new home buyers establish a reserve fund with incremental savings. A few bucks from every paycheck, sometimes an entire bonus check or tax return, is normally enough to get the job done. Others consider changing dining habits to eating out once a week/month. Whatever works best for you.

As added protection, I recommend one to two-year home warranties upon moving in. It will keep you protected on serious considerations for the length of its terms, but it also gives you peace of mind for that time as well, allowing you to stow away more funds for your emergency account.