Importance of an Emergency Fund

Are you prepared to handle an unforeseen emergency? Whether it’s a health-related problem, a car accident or a job layoff, you might not see it coming. The Covid-19 pandemic taught us that life and finances can be disrupted unexpectedly. That’s why it’s important to have an established emergency fund.

What is An Emergency Fund?

An emergency savings fund is a lump sum of cash set aside to cover any unanticipated expenses or financial emergencies that come your way. You may need to access cash quickly and easily, and your emergency fund can keep you going for a few months. Most experts say you should have three to six months of savings in your emergency fund.
 
Here are three ways an emergency fund can help you:

Prevents You from Going into Debt

This is one of the most important reasons to have an emergency fund. You can avoid relying on high-interest debt options, like using your credit cards for more than you can pay back or pulling from your retirement fund. High-interest fees and penalties put the future of your finances at risk.

 

Helps You Make Better Financial Decisions

Setting aside cash in an emergency fund helps keep some money out of sight and out of mind. Having money out of your immediate reach can make you less likely to spend it on a whim.

 

Provides Peace of Mind

If you worry about financial stability, you’re not alone. According to the American Psychological Association, 65% of people site money as a significant source of stress. If fears about getting hit with a large, unexpected expense keep you up at night, an emergency fund can give you the confidence to tackle any of life’s unexpected events.
At Landmark, we have savings, certificate and money market accounts designed to help you fast-track your emergency fund. Learn more about all our savings offerings here.