What is Emergency Savings? – Wells Fargo

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What is Emergency Savings?



Let's be honest. Unexpected financial issues come up for everyone. Sometimes they're small, like a flat tire, and sometimes...they're more significant. It's not a question of "if", it's a question of "when". What can we do to make these bumps in the road more manageable?

The number one thing we can do is to start saving money for unexpected financial issues...today.

The rule of thumb is to have 3 to 6 months of expenses saved for emergencies. Working up to that goal may take time, so start with simpler goals, like setting aside an amount equal to the last major car repair or surprise expense. Then, save a month's worth of savings and then another. Any savings we have set aside--whether a little or a lot-- is money we won't have to borrow when the unexpected happens, whether it's a car or home repair, job loss, or other emergencies.

To get started, we could open a separate savings account for emergencies, and then set up automatic transfers from your checking account on a regular basis. Add a nickname to the account as a reminder of what that money is for.

For an extra boost, set aside a portion of windfalls, like tax refunds or job bonuses, and deposit them right into that account. By taking these simple steps, we'll start to see our savings grow, along with the confidence to handle life's twists and turns.