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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 everyday, non-emergency expenses. That’s why it is usually a mistake to keep your emergency fund in a checking account. If money is available, 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 minimums. 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:
• Begin with a small, regular amount that you know you can commit to and do it as planned.
• Save parts of extra funds such as income tax refunds and surprise rebates. If you receive a tax refund
or Earned Income Tax Credit, use
a portion of this money to begin or increase savings. Since the Tax Credits average nearly $2,000, you may
be able to open a savings account and still have plenty of money to pay off debts or cover other expenses.
Saving for Major Purchases
Today, there are three kinds of people: the have’s, the have-not’s, and the have-not-paid- for-what-they-have’s.
—Earl Wilson
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