Less than half of American adults could cover their expenses for more than a few months in the event of a sudden loss of income. Whether that be the unexpected loss of employment, a medical crisis that hinders your ability to work, or anything in between, preparing an emergency fund will secure your financial stability and ease financial burden during times of uncertainty. The need to plan for emergency funding is important for people across all income brackets and ages. Without an emergency fund, many turn to short-term solutions such as using credit cards, high interest lending options or borrowing from other savings accounts. While these solutions may help in the short term, they can also set back your financial goals.
Building and planning a fund takes discipline and patience, but with a clear set of goals and the right savings and investment strategies, a fund will allow you to focus on long-term goals, despite short-term needs.
Everyone’s financial needs and goals are different – what may work for one individual may not be the right planning approach for another. The key is to understand your specific needs and work towards a plan that allows you to comfortably grow your savings. Factors such as your existing credit card debt, the rate at which your income could be replaced and how much money you need per month for your specific lifestyle need to be accounted for when determining your saving approach.
Start by setting a goal of how many months of income you would like to accumulate, then start working towards a series of smaller, more attainable milestones. For example, if your goal is to save $15,000, break that number into a contribution amount by day, week or month. Then, decide which account you will contribute the amount to at your desired frequency. High-yield savings accounts and money market accounts are examples of good accounts to use because they allow access to the funds whenever needed.
If you are still unsure how to get started or would like to learn more on strategies that will work best for your situation, it may be time to talk to a professional to make sure that all your financial needs are accounted for, both in the short- and long-term.
Contact a Baker Tilly Wealth Management professional today.
Baker Tilly Wealth Management, LLC (BTWM) is a registered investment advisor. BTWM does not provide tax or legal advice. BTWM is not an attorney. Estate planning can involve a complex web of tax rules and regulations. Consider consulting a tax or legal professional about your particular circumstances before implementing any tax or legal strategy. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Securities, when offered, and transaction advisory services are offered through Baker Tilly Capital, LLC, Member FINRA and SIPC; Office of Supervisory Jurisdiction located at 4807 Innovate Ln., Madison, WI 53718; phone: +1 (800) 362 7301. Baker Tilly Wealth Management, LLC and Baker Tilly Capital, LLC are controlled by Baker Tilly US, LLP. Baker Tilly US, LLP, is an independently owned and managed member of Baker Tilly International. © 2022 Baker Tilly Wealth Management, LLC