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.
What is an Emergency Fund?
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.
Budgeting and managing your money has never been easier!
Start Your Emergency Fund in 4 Simple Steps:
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: Peach State's Money Market Account or high-yield Savings Accounts are great choices for an emergency fund. Both earn high 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 visiting one of our Georgia or South Carolina 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.
When to Use Your Emergency Fund
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.
Identifying True Emergencies
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.
Accessing Your Funds Quickly
It’s important to have your financial cushion in a dedicated account that's quick and easy to access when you need it most. Peach State's Savings Accounts and Money Market Accounts provide a safe place to tuck away a rainy day fund without the temptation of daily spending that a Checking Account may have.
Alternatives If Your Emergency Fund Isn't Enough
Sometimes, even when there is an emergency savings account as a financial safety net, it may not be enough to cover the unexpected expense. Peach State offers affordable alternatives that help get you through an emergency financial crisis.
Low-Rate Credit Cards
Peach State'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.
Personal Loans
Peach State has you covered with our low-rate Personal Loans. With flexible terms, a variety repayment options, and affordable monthly payments, a Personal Loan can help alleviate the stress caused by unforeseen financial circumstances.
Other Financial Options
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. With access up to $150K, a Peach State HELOC offers you quick access to a line of credit whenever you need it.
Maintaining Your Emergency Fund
Avoiding Temptation
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.
Regularly Reviewing Your Emergency Fund
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.
Replenishing After Use
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.
Peach State is Here for Your Emergency Needs
If you're ready to start building an emergency savings fund to secure your financial future against unexpected events, Peach State 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!
