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Emergencies can happen at any time—and if you’re unprepared, they can seriously derail your finances.
Having an emergency account, though, provides a financial safety net. It can save you from borrowing hundreds, if not thousands, of dollars to cover unexpected expenses.
However, you might ask, “How much should I have in my emergency account?” How much money do you need in your MIDFLORIDA Credit Union Regular Savings account to protect you against a financial crisis?
Let’s answer these questions and discuss how to start saving for your future below.
Open a Personal Savings Account at MIDFLORIDA Credit Union today!
How much do you need in your emergency savings?
Most financial experts agree you need between three to six months’ worth of income for a substantial emergency fund. Exactly how much that is depends on your personal finances.
These savings should be worked into your existing budget.
Try to set aside six months of income if:
- You’re at a high risk of losing your job
- You have a family
- Your income fluctuates between months
- You have a health insurance plan with a large deductible
On the other hand, you may only need to save up three months of income if:
- You have a stable job
- You live by yourself
- You have multiple income streams
What if you don’t have three to six months of income saved?
If you don’t have at least three months of income saved, don’t panic. Remember that any money in your emergency fund can help you lower costs when an emergency strikes.
However, the more you save, the more prepared you’ll be for an emergency.
Spending shocks
Once you have $3,000 saved, you should be able to handle most “spending shock” emergencies.
These are what come to mind for most people when they think of financial emergencies.
Spending shocks can include:
- Auto accidents
- Car repairs
- Emergency room visits
- Home repairs
- Replacing appliances
- Family emergencies
- Veterinary bills
Income shocks
Income shock emergencies can be even more stressful than spending shocks. These emergencies deal with income loss, such as getting laid off or becoming too sick to work.
As financial experts recommend, you’ll need three to six months of income to get through these types of emergencies. Fortunately, these emergencies tend not to happen as often as spending shocks.
How to start an emergency fund
Starting an emergency fund can seem intimidating. However, you don’t have to put three to six months of income in your emergency fund all at once.
Start slowly by saving 10% of your paycheck each month. If you can’t put aside 10%, figure out what you can set aside and do it regularly.
If you get your paycheck directly deposited into your account, designate that a portion of your check goes into a savings account instead of your checking account. That way, you won’t forget to set aside money or be tempted to spend it.
This might not seem the fastest way to build up your emergency fund. But after you’ve been saving for a few weeks you’ll be surprised at how much you’ve saved.
What if you have an emergency before you’ve reached your savings goal?
When starting an emergency fund, one of the most common questions is what will happen if an emergency arises while you’re still putting money aside.
Fortunately, true emergencies are rare. Chances are that you’ll have saved up a significant amount by the time one occurs. Even if you’ve only saved $100, that’s $100 you won’t have to borrow.
Also, remember that the money in an emergency fund is meant to be spent for that purpose. You’re supposed to use it for emergencies, then replenish it once the emergency is passed.
What is the best account to store an emergency fund?
When you start putting money aside for an emergency fund, a savings account like a MIDFLORIDA Regular Savings account is a great choice.
After you’ve been saving for a while, though, you might want to consider a different type of savings account.
- A high-yield savings account like the MIDFLORIDA High Five Savings account can help you grow your emergency fund faster with a higher rate of interest.
- A money market account, such as a MIDFLORIDA Money Market account, can also help build emergency savings. Earn a little interest with the flexibility of a checking account.
Start an emergency fund with the help of MIDFLORIDA
An emergency fund is your best defense against unexpected expenses or loss of income. A robust emergency fund can help you avoid debt and reduce stress when facing a financial crisis.
The ideal amount to save in your emergency fund depends on your personal financial situation. However, you should aim for at least three months’ salary in your emergency fund. Six months’ worth of income provides even greater security.
If you want to start your own emergency fund, your best bet is to open a MIDFLORIDA Regular Savings account. Even better, if you’re a new member and open up a Free Checking account, you can get a $200 bonus if you meet the terms and conditions 1. It’s a great way to kickstart your emergency fund!
1. Offer valid as of February 1, 2025, and may be canceled at any time. MIDFLORIDA Credit Union membership and eligibility requirements apply. Paper statements are not routinely provided for Free Checking accounts. See associate for details regarding fees and terms. Minor accounts excluded. To qualify for the incentive, you must open a new Free Checking account online or at any MIDFLORIDA branch with direct deposit ($500 cumulative which must post within 60 days of account opening; Cash transfer app deposits do not qualify); accept and open online banking, eStatement, and a debit card; and complete 5 debit card purchase transactions which must post in one calendar month (to be completed within the first 60 days of account opening). No dividends are paid on Free Checking. Annual Percentage Yield is 0.00%. Limit one incentive per Social Security number. Past checking account holders and previous recipients of checking account incentives are ineligible. The incentive will be deposited to the new Free Checking account within two weeks after all qualifications have been met and will be reported to the IRS. Minimum to open Free Checking is $50.
