An emergency, by its definition, is not something you can predict. The onset of an illness, an accident, a broken car, and a hole in your roof all count as emergencies. Of course, if you had money saved up for such eventualities, you would probably feel a bit more secure.
How much money should you save for emergencies?
As an emergency can derail your budget even for daily needs, like food or commute to work, you should have some money saved up specifically for this possibility. It may be different for every person or family, but a safe estimate would be to have at least three months’ budget.
What if your emergency fund is not enough?
You can’t estimate something that hasn’t happened yet, so if you do find that your emergency funds are not enough to cover your urgent needs, you must already know where to turn. The safest option for anyone is going to friends and family. Your personal network may be able to loan you some cash.
If you are uncomfortable borrowing from them, you may offer a payment plan or even a reasonable interest (which they are likely to turn down, but the gesture may matter). Know also where you can get quick cash loans in Salt Lake City in case your F&F can’t help you. These loans are ideal if you can pay them back on your next paycheck because they may not charge much interest, just a small fee.
Should you keep it separate from your regular savings?
You should only touch your emergency fund if you do have an emergency since that is the point of it after all. Open a separate bank account for it and it alone. If you have a regular bank account for bills, for buying a new vehicle, for school, or for a trip to the Bahamas, never mix your emergency fund with those.
You can’t predict when an emergency might happen, but it’s safer to have a backup fund and know where to turn should you need quick cash, as these are better than having nothing at all.