As the new year approaches, we often find ourselves reflecting on the things in life we’d like to change, eliminate, or improve.
Sometimes it’s hard and takes discipline, like — lose those 40 “pandemic pounds” that have been hanging on far too long. Others may require less pain and struggle, but with a little discipline can be easily accomplished, like creating and growing your emergency savings plan.
How much to have in your Emergency Savings
Everyone has their own unique situation, but there is general guidance you can follow to give you an idea of how much to have in your emergency savings.
Single-earner household: Have a minimum of six months worth of expenses saved.
Double-earner household: Have a minimum of three months worth of expenses saved.
This money needs to be easy to access, not locked up in accounts that won’t allow access for a certain amount of time like retirement accounts or term shares/CDs. Canopy’s checking and savings accounts are great places to keep your emergency savings. When deciding where to put your emergency fund, a great idea is to make sure the account is in a high-interest account that’s safe and easy to access.
Tips for Growing an Emergency Savings Fund.
- Start small. There’s no need to overwhelm yourself. Begin with something small. Set aside a few dollars from each paycheck, the revaluate after a few months and if it feels doable, slowly increase the size of your contributions. It’s less daunting to begin slowly rather than going all in which could easily be discouraging if you’ve overshot what you can really afford.
- Don’t make excuses. It’s easy to think, “I don’t make enough money to save” or “I’m waiting for my tax return before I put money in savings”, but like most things in life, you can’t accomplish a goal if you never start acting on it. Make it easy. Ramp up slowly. You’ll be amazed after a few months how quickly it starts to stack up.
- Reap the rewards. Stuff happens, right? But imagine how it feels to be prepared for an unexpected expense, a car repair, broken appliance, kid’s field trip (they swear they brought the note home), or a friend in need. The stress will literally roll right off your back because you had the foresight to put a few dollars away for that inevitable rainy day.
- Set it and forget it. Set up automatic transfers from your checking account to your new emergency savings fund so that they happen after every paycheck clears. Set them for amounts that work for you now and you can increase your deposits later, when it feels right.