Your Emergency Fund
Financial Wellness Spotlight
It's never a bad time to think about new ways to improve your financial life. “Be better with my finances” is one of the most common personal goals. The many faces of this goal include saving more, spending less, and paying off debt.
The Power of Saving
The most important thing you can do to improve your financial security and provide financial stability for your household is establish an emergency fund. Making your emergency savings a priority is a financial game-changer. Though it can be difficult to determine how and where to set aside some money every payday, while also managing spending needs and debt, having these reserves for unexpected expenses and family emergencies is the way you avoid financial havoc and further debt. Additionally, the peace of mind gained from having an emergency fund can free up energy for other areas of your life!
The Myth of Will-Power and Self-Discipline
Relying on will-power and self-discipline alone is often not enough. Some days we are naturally more motivated than others, some days we may feel impulsive, and some days our priorities are just different. A better approach to reaching your financial goals is to take the path of least resistance.
- Pay Yourself First: Treat your payment into your emergency savings like a bill. However small the amount you’re putting away, make it mandatory, not optional. Pay yourself (your emergency fund) first, and with the rest of your bills.
- Be a “Lazy” Saver: The key to successful saving is to make automated payments to a separate emergency savings account. Set up automatic recurring payments weekly, monthly, or by pay period. You can even direct part of your direct deposit paycheck into this account before you even see the money. Resolve to take the few minutes needed to do this today, or set a date to do so on your calendar.
- Every Penny Counts: Just getting started with your savings habits? No amount is too small. Take some time to see where you can trim your budget. For more help balancing your expenses with your habits, check out My Finance Tool, the online budgeting tool that allows you to manage you all your accounts, all in one place.
- "Raids" Will Happen: You may need to raid your emergency savings account to cover unexpected expenses and family emergencies. That is exactly what it is for! Poor decisions are often made in a pinch, so it is better to raid your savings than to borrow from credit cards or other loans. That isn’t to say credit cards and loans can’t be helpful tools if used correctly, but they are no match for emergency expenses.
Don't Focus on What's "Enough"
How much is enough emergency savings? The amount can vary depending on your needs, but you'll usually hear that it's important to have 3-6 months' worth of your "getting by" expenses (your fixed costs - rent/mortgage, food, etc). However, it's important to remember that this is a goal, and goals are meant for working towards. Do not let yourself become discouraged by a magic number; the right thing to do is just keep exercising your saving muscle.
Your Credit Union Can Help!
BMI Federal Credit Union offers free Financial Coaching* to help you put together your best plan for saving, spending and paying off debt. You can schedule a free phone or in-person session with a Certified Financial Coach today! Our award-winning Financial Education Program also includes free community workshops and our free Online Learning Center.
Join the Credit Union!
BMI Federal Credit Union offers several easy ways for you to save. Explore our website and open an account today!
*Coaches are located at every branch, and their services are offered FREE of charge to all members. Our coaches are certified through the Credit Union National Association (CUNA), and are required to be re-certified every three years.
BMI FCU is open to everyone who lives, works, worships or attends school in Franklin, Licking, Fairfield, Pickaway, Madison, Union, Delaware or Morrow County. This credit union is federally insured by the National Credit Union Administration. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company. Equal Housing Lender.