Blog Highlights:
Build It Smart: Simple steps to start and grow your emergency fund
Spend It Wisely: How to know when it’s truly an emergency
Backup Plans: What to do when your emergency fund falls short
It’s always a good idea to have an emergency fund for unplanned expenses that are sure to occur. From expensive car repairs to an unexpected job loss, an emergency fund is a smart way to protect yourself when these unforeseen events happen. In this blog, we'll share the ins and outs of an emergency fund, best practices for use, and alternatives in case you need more financial cushion for life's unexpected events.
An emergency fund is a dedicated savings account, also known as an 'emergency savings account' that serves as a financial safety net for unplanned expenses such as car or home repairs, medical bills, job loss, and more. Keeping an emergency savings account is a smart way to ensure you're financially prepared and protected for life's unforeseen events.
An emergency savings account can keep you from resorting to high-interest rate credit cards, falling behind on payments that can tarnish your credit, and allows you to recover from financial loss faster. Give yourself peace of mind and start your emergency fund with these 4 easy steps:
Set a Savings Goal: Add up your monthly expenses, review your income, and set your emergency fund goal. Next, create a budget and determine how much to save each month. To grow your emergency fund faster, find ways to trim spending or increase your income.
Choosing the Right Account: CCCU's Money Market Account or high-yield savings accounts are great choices for an emergency fund. Both earn dividends to grow your money, offer no monthly service fees, and provide easy accessibility.
Start an Account: Open a Money Market or Savings Account by applying online or visiting one of our locations. A friendly and knowledgeable team member will assist you in finding the best account for your needs.
Funding Your Emergency Account: Make regular deposits to your emergency fund and watch your savings grow. For an easy and convenient way to keep momentum in building your emergency savings, set up automatic deposits to your emergency fund each time you get paid.
While some situations require immediate attention, others may not be as urgent. Constituting a true emergency will help you determine when to use your emergency funds, or whether to save up and make a purchase later on.
True emergencies include things like:
Home Repairs
Medical Bills
Auto Repairs
Loss of Income/Job
Financial Tip: An emergency savings account should only be used for essential needs that were unexpected or not budgeted for. Consider alternatives such as comparing costs for repairs versus making full replacements. This may save you money and keep more of it in your emergency fund for future use.
Sometimes, even when there is an emergency savings account as a financial safety net, it may not be enough to cover the unexpected expense. CCCU offers affordable alternatives that help you get through an emergency financial crisis.
CCCU's low-rate credit card options are a great backup plan for emergency situations. With competitively low-rates, no annual fee, and fee-free cash advances, our credit cards offer reliability for when you need it most.
CCCU has you covered with our low-rate Personal Loans. Personal Loans feature many benefits including a fixed monthly payment schedule, flexible terms, and an end date when your loan will be paid off.
If you have equity in your home, consider opening a Home Equity Line of Credit (HELOC). It's great way to prepare in advance and secure a nest egg for unexpected life events. While you are able to borrow up to 80% of your home's appraised value, you are only required to take a minimum line amount of $10,000 offering you quick access to a line of credit whenever you need it.
The key to preserving an emergency savings account is financial discipline and avoiding temptations to use the money for nonemergency purposes. Keeping emergency funds in a separate account to prevent impulsive spending is a smart choice in ensuring you'll have the money available when you need it.
Monitoring your progress and making adjustments along the way is important for maintaining your emergency fund. By keeping regular tabs on your money, you'll know exactly how much is available should you need to use it, whether to adjust or replenish your savings, and will keep you motivated to meet your goals.
Don’t be afraid to use the money if an emergency situation arises – this is the purpose of an emergency savings account. Just be sure to replenish the funds after use and continue with regular contributions via automatic deposit, recurring online transfers, or other regular deposits to ensure money is available the next time you need it.
If you're ready to start building an emergency savings fund to secure your financial future against unexpected events, CCCU is here to help! We have a variety of savings account options, financial resources, and free budget templates to get you started.
If you'd like help determining the best strategy for your unique financial situation or need assistance getting a loan, contact us today!
1All loans subject to credit approval. Balance transfer fees may apply during promotional rate periods. Contact credit union for complete list of fees. Actual Annual Percentage Rate is based on creditworthiness and will vary based on the Prime Lending Rate. Rates, terms, and conditions are subject to change. For more information, refer to our Visa Disclosures or contact the credit union.
