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How Much Should I Be Saving for Emergencies?

picture of money with vice gripWe all know how life can throw us curves at any point — a job loss, illness, accident, car repair, natural disaster — just about any emergency can pop up at any time. If you learn how to save money, and have reserves to deal with sudden expenses, you'll be in much better shape during difficult times.

Creating an emergency savings fund is the first step in preparing for the unexpected. And it's never too early or late to start building a strong financial foundation.

Determine what savings amount makes sense for you, then set a goal to get there. Some experts recommend three to six months of expenses. Others say you should have a certain dollar amount in mind. And some say you should pay off high interest debt before starting an emergency fund. Only you can decide what's best for your situation.

Why Create an Emergency Fund?

You can't control everything that happens in your life. But you can learn how to save money, and prepare to pay for things that come out of the blue. If you set emergency funds aside, you can use cash to pay for unexpected expenses. You won't need to use other more costly forms of funding.

For example, you won't have to turn to debt to cover an expense. Credit cards are great for emergencies. But if you can't pay the balance charged each month, you'll be paying extra money in interest. You also won't need to raid investment or retirement accounts. Withdrawing money from these accounts can add early withdrawal penalties and reduce your long-term financial cushion.

Establishing an emergency savings fund also keeps your budget intact. You won't have to miss payments on existing obligations to pay for unexpected things. Late fees and overdraft charges can add up and take a big chunk out of your hard earned dollars.

Probably the most important reason to learn how to save money and create an emergency fund involves your well being. Knowing you'll have the money to pay for emergencies eliminates stress and helps you focus entirely on resolving the issue at hand.

Where Do I Learn How to Save Money for an Emergency Fund?

Regions has online resources to help you learn how to save money and determine the right amount for your situation. Learn how much you should set aside for emergencies with our Save for a Rainy Day calculator. You can begin with small steps like setting up a direct deposit from your paycheck into a savings account. Or, you can schedule an automatic transfer from your checking to savings account each month.

The key to building your emergency fund is making regular deposits. Even small deposits add up over time. If you're having trouble finding money to contribute, look to cut an existing expense. You just can't afford not to have emergency funds socked safely away.

Savings accounts are easy to use and you can do your banking online in most cases. Plus, you'll have immediate access to your money whenever you need it. You can consider other options as your balance grows, like Certificates of Deposit or Money Market accounts.

Regions Online Tools

Regions has budget calculators to help you manage your money throughout life's stages. You can also find tools to help you choose the right savings account for building your emergency fund.

To learn more about the available savings plans, visit the Regions branch nearest you or give us a call at 1-800-REGIONS. We'll be happy to answer all your questions.

Tips
Tips icon
  • Save Time - Make a list. Planning eliminates extra trips — grocery, shopping, and errands — due to forgotten items. And when you can, combine trips to save even more time.
  • Save Money - Review two or three of your most recent credit card bills, highlighting all your essential purchases: the non-essential items that remain might surprise you. Prioritize your luxury spending, cutting out the items that you don’t really need.
  • Save for the Future - When buying major appliances such as a refrigerator, washer, dryer or dishwashing machine, spend slightly more now to save more money in the long run on energy and water bills: buy the appliance with the highest ENERGY STAR and WaterSense ratings that you can afford.
  • Save Time - To save time, do your grocery shopping in the middle of the week, when lines are shorter and stores are not as crowded.
  • Save Money - Track all of your spending for two weeks—this includes coffee, magazines, tollbooths, etc. Look at the results and see where you might able to cut back.
  • Save for the Future - Put all your coin change you receive from purchases into a jar. At the end of the month, take the jar's contents to the bank and put it right into savings.
This information is general in nature, is provided for educational purposes only, and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Regions neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.