Why Emergency Funds Should Be a High Priority

These days, being burdened by debt is almost a guarantee for college graduates before even earning their first paycheck. So why should building an emergency fund become a top priority?

 Paying debt is a financial goal that should go hand-in-hand with saving money, which can be in the form of setting up an emergency fund or making investments.

What is an emergency fund and why do I need it?

An emergency fund is money stashed away for emergencies. Think of it as a safeguard for when something unexpected happens, saving you from having to take out another loan or racking up on credit card bills.

The size of your emergency fund is a personal matter, but there are some general rules you can follow. CNBC’s expert guide on emergency funds recommends starting with an aim of saving $2,467 for low-income households.

How much should I put into my emergency fund?

Due to its nature, an emergency fund should be liquid, but that doesn’t mean you should be hiding money in a piggy bank.

Where do I put my emergency fund?

It’s best to separate it from your checking or main savings account. Two popular options for doing so are high-yield savings accounts and money market accounts.

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