Office of Enrollment Management

Emergency Fund

 

life raft

Protect Against Unforeseen Events

Emergency funds are designed to be used during a time of need.  However, just like a life raft it must be put in place prior to use. If a life raft or life boat is not available, then the emergency becomes even more difficult to navigate. We never know when an emergency will occur so having an emergency fund helps up to prepare for these events.

Creating an emergency fund requires planning. A good rule of thumb is to have 3 to 6 months of expenses saved.  You can determine your monthly expenses by looking at your budget.  If you have a stable job and are not worried about fluctuation in pay, 3 months of expenses should be enough.  If you are concerned about job loss, have a fluctuating income, or a high amount of debt, consider a six month emergency fund to add extra protection. Remember an emergency fund is security for you from the woes of life and should only be used in times of urgent need.

As a student, it may be difficult to create a 3 to 6 month emergency fund.  Shoot for at least $500 to $1000 in a savings account for emergencies.  

Funding an Emergency Fund

Get creative in how you will save up $500 to $1000. Do this as quickly as possible. These are temporary, flexible, and create a quick flow of cash.

1. Sell old items, such as clothes or an old phone.

2. Work overtime.

3. Babysit, mow lawns, or pet sit.  

4. Cut your budget, temporarily, to save up.

5. Use your tax return. 

These are a few ideas on how to save $500 to $1000 quickly.  Share with us your creative ideas. 

Stashing the Savings

Keeping your emergency fund accessible, but not too accessible is key. Place your savings into a savings or money market account. This will allow a small amount of interest to grow. Remember that an emergency fund is a form of personal insurance.  You are reducing the risk of a financial crisis so an emergency fund is not designed to make you wealthy.