Page 50 - Book10E

40
in sleep and job productivity loss as well as deteriorating health. The survey found that 42% of all women surveyed said they had emergency savings of less than $500. What’s more, 55% of women between the ages of 25 and 34 said they did not maintain an emergency savings account of at least $500.
• Your emergency fund should contain three months’ worth of liv- ing expenses. The amount does not have to equal three months’ worth of your salary, but only what you need to pay the rent or mortgage, repay debt, buy food, and make the car payment.
• Set up a basic record-keeping system using a personal finance program such as Microsoft Money, Quicken, or other similar programs.
• Place your emergency money in a “highly liquid” or easily accessible account, such as a savings account at a bank or credit union. These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds. Keeping your money in a savings account makes it less likely that you will use these savings to pay for every day, non- emergency expenses. That’s why it is usually a mistake to keep your emergency fund in a checking account. If money is avail- able, you will spend it, generally not on emergencies.
• You may need at least $100 to open the savings account and a $200 minimum balance to avoid monthly fees. In most areas, however, there are several financial institutions with lower mini- mums. Also, banks and credit unions may waive the minimums if you have other accounts at that institution. Wherever you open an emergency fund, persuade your banker to eliminate any account fees.
How to Find Money to Save
Building up your emergency savings is most easily achieved through small, simple, and steady steps. Here are some tips for saving that will help you build up and maintain an emergency fund:
Unexpected Expenses