According to the PricewaterhouseCoopers (PwC) nationwide Employee Financial Wellness Survey 2015 Results, nearly half of all employees feel their financial situation causes them stress. Over time, this continued anxiety may lead to serious health problems, such as heart disease, high blood pressure, depression and other illnesses.
The team at Healthy Lives is working with financial experts in the community to provide monthly tips to help you break the cycle of financial stress. This month, the Financial Fitness Team shares the importance of establishing an emergency fund to cover life’s unexpected events.
What is an emergency fund and why should I have one?
For most people this is a savings account offered through a bank or credit union. A fully funded emergency fund is between 3 to 6 months of your salary. For example, if you make $1,000 a month, you would want to build your emergency fund up to $3,000.
An emergency fund allows you to withdraw funds without having to pay fees for taking the money out. These savings cover you for life’s unexpected expenses like a flat tire, medical expenses or an appliance repair. With a fully funded emergency fund, you avoid going into debt.
It is important to note that an emergency fund is different from your retirement account, which usually has fees for withdrawing early.
How do I get started?
Put away a certain amount of each paycheck into a savings account. For some this could be $50 or 5% of your paycheck. Choose an amount that is comfortable to you. The secret is to start saving something and building from there. Start saving today, and break free from the stresses of debt!