Being Financially Prepared for a Disaster
October 28, 2021
Disasters come in many forms – from hurricanes to heat waves, wildfires, flooding, car accidents and everything in between – but all have one thing in common: they can result in overwhelming financial costs.
If this year has taught us anything it’s the importance of being ready for the unexpected – which should include far more than having insurance, an evacuation plan and supplies. We’ve also learned that the best time to prepare for an adverse situation is before it happens.
On the heels of National Preparedness Month and during peak hurricane season here in Florida, BayFirst has compiled information about an important action all consumers should take now to ensure they are financially
prepared for any emergency. And that’s setting up an Emergency Fund.
- What is an Emergency Fund?
An emergency fund is a bank account with money that has been set aside to pay for unexpected expenses large and small, including:
- Medical expenses
- Home repairs
- Auto repair
- Why is an Emergency Fund important?
An Emergency Fund provides a financial safety net that can help get you through a difficult time without relying on credit cards or high-interest loans.
- How much you should have saved?
Most experts recommend having enough stashed away to cover all living expenses for three to six months. The right amount for you will also depend on your financial circumstances, but even having $500 can provide enough breathing room make a difference.
- Where should you save it?
An Emergency Fund should sit in a separate account from other funds (so you are not tempted to spend your reserves) and be available at the first sign of an emergency. So, it’s best to place it in a savings account with a high interest rate and easy access and not a long-term investment high-yield savings accounts
your money earns interest, and you can access your cash quickly when needed.
- What’s the best way to save?
For most, it’s easier to set several smaller savings goals, rather than one large one. You do not have to start with three months’ worth of expenses. Start with one month, or one week. Then set a new goal. Then, to help grow your savings, find small ways to cut back, whether it’s one less dinner out a month or skipping the coffee line on the way to work. Another great way to save is having a small portion of your paycheck deposited into your Emergency Fund directly so that you do not even have the option to spend it. Chances are you won’t even miss it.
We hope you will take the time now to prepare financially for anything that may come our way next. If you want to speak to a savings expert about setting up your own Emergency Fund, contact us
today to get started and get peace of mind.