Build an Emergency Fund for Life's Unexpected Expenses

When life gives you lemons, you may not always be in a place to make lemonade. But at the very least, some preparation for unforeseen circumstances will make the taste a little less sour. Let us walk you through some of the ways you can financially prepare for life's lemons, big or small.

We've all had moments in our lives where we could have used an extra cushion of cash to soften the blow, and it's safe to assume similar hardships will happen again. By building a safety net with an emergency fund, you will grant yourself some peace of mind knowing that you'll be prepared for life's tribulations. There are many ways to accomplish this, though there are some very important things to keep in mind before you start.

Build for your lifestyle

Everyone's rainy-day fund will look a little different. Whether you are a single household, own a home, have a family, or have large monthly loan payments, a good rule of thumb is to set aside enough money to cover between three to six months of your living expenses. Regardless of what stage of life you're in, this will ensure that you will be set for a good enough length of time to try and recover without going into too much debt.

It's tough to determine exactly how much an emergency will cost you: unexpected expenses can range from a trip to the hospital to car repairs to the loss of a job. You can always estimate how much is right for you to save by using an Emergency Fund Calculator online, but by saving enough to get you through at least three months, you'll have a significant cushion to protect you from most financial issues that may arise with the emergency. The more you're able to save, the better!

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Keep Your Funds Secure

Once you've determined how much you'd like to stash away, it's time to decide which account type to use. It's crucial to keep your funds in some kind of savings account; that way, you won't be tempted to spend them. There are many great options to keep your money safe and earn dividends while it's unused!

Regular Savings Accounts are the perfect place to start. They have a small dividend that will earn you a little while you store your cash, and the funds can be withdrawn without the worry of fees. If you'd like to earn more, a Super Share Account has a much better interest rate, and the limited number of withdrawals per month will help steer you away from spending your savings. 

Levo Credit Union® offers Savings Accounts called a Super Share Account, and if you have $2,000, you qualify for a Super Share Account, which provides higher dividend rates. 

Another option is a Share Certificate of Deposit (CD), which allows you to earn a high interest rate while keeping your funds locked away for 3 months to 5 years. This is a good option if you're confident you will not need to touch your money for a good while, as an early withdrawal would mean penalty fees.

No matter what way you choose, be sure to keep your emergency funds separate from the rest of your finances. It's much easier to keep track of and build up that way!

Grow your Safety net

The hardest part of saving is, well, saving. Especially in recent times, it can be very difficult to set aside enough money even to form a small savings. But regardless of how much you make or where you're at in life, these are some tried-and-true methods that can help.

• Set up small transfers for each pay period - Even $50 saved every paycheck adds up! If you consistently set aside even a small amount of money, you'll build a hefty savings in no time.
  

   

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• Use dividends to your advantage - Any interest earned from a savings account is money in the bank! Try to keep most of your savings in an account with high dividends and watch your money grow over time.
• Save your tax refund - Getting those government checks in the mail every year leads to lots of options on how to spend it. Even though it may be burning a hole in your wallet, it's a good idea to save it for later and use it when you really need it.

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• Cut out unnecessary spending - There is absolutely nothing wrong with getting a morning coffee or going out to eat--we all deserve a treat now and then! However, doing so less frequently will make saving just a little easier. In addition, cancelling a subscription or two you could live without will save you money each month, which can go towards your emergency fund.
• Budget your expenses to afford some wiggle room - Figuring out exactly how much you're spending on rent, utilities, bills, and groceries can be super helpful for many reasons. When you calculate how much you earn versus how much you spend, you can get a much better idea of how much you have left over (in other words, how much you'd be able to put towards a savings account.) There's a plethora of budget tools online that can help if you're not sure where to start!

The Best Time is Now

No matter what your month-to-month expenses look like, any small way you can save will be a big help for you in the future. The sooner you start saving, the more time you have to collect those much-needed rainy-day funds for whenever you may need them.