Millennial Money: Don91裸聊视频檛 freak out about your emergency fund

Let91裸聊视频檚 be real: For millennials, having an emergency fund is way down on the financial worry list, behind student loan debt, medical bills or saving for a down payment.

Some weeks, it can feel like you barely have enough money to get by, let alone put some away for a rainy day.

But that cash stash can be crucial in preventing a debt spiral or keeping you afloat if you lose your job. Regardless of income, building your emergency fund doesn91裸聊视频檛 have to be intimidating.

START SMALL, BUILD A HABIT

First, pick an amount you can put away on a regular basis, no matter how small. Then, commit to it.

91裸聊视频淚t can be as little as $10 a week into a separate savings account,91裸聊视频� says Lara Lamb, a certified financial planner at Abacus Wealth Partners in Los Angeles. Making a small contribution every week is less painful than shooting for an ideal final sum, she says. Automatically transferring the money to a separate account helps you succeed at saving.

The saving habit 91裸聊视频� even if it91裸聊视频檚 small 91裸聊视频� is valuable for your finances in the long term, says Eric Gabor, a certified financial planner at Eagle Grove Advisors in Jersey City, New Jersey.

A family with at least $250 in savings is less likely to face financial turmoil such as a missed utility payment or eviction, according to a 2016 study by the Urban Institute, a Washington, D.C.-based think-tank . Any amount above that 91裸聊视频� $400, $500 91裸聊视频� improves your chances of navigating a setback.

Getting started is especially important for younger adults. An Urban Institute study released this year found 35.6 per cent of adults ages 18-34 surveyed in December 2017 had experienced 91裸聊视频渇inancial insecurity91裸聊视频� in the previous 12 months. That was the highest among the study91裸聊视频檚 three age groups of adults under 65. It defined financial insecurity as the 91裸聊视频渋nability to come up with a small amount of money to buffer negative economic shocks or to pay his or her credit card or nonmortgage loan.91裸聊视频�

Lamb suggests working toward one month91裸聊视频檚 fixed expenses, which includes rent, groceries, transportation and insurance. 91裸聊视频淒on91裸聊视频檛 worry about your eating-out money or shopping money,91裸聊视频� she says. 91裸聊视频淚f you are in an emergency or a transition, the whole idea is you would cut back on your spending.91裸聊视频�

A savings account that pays a high interest rate is a smart place to keep your fund, both planners say, so it can grow.

MAKE USE OF WINDFALLS

An easy way to kick-start your fund is to use windfalls 91裸聊视频� part of a tax refund or even birthday money from relatives.

Young professionals typically get tax refunds instead of owing money, Gabor says. The IRS allows you to direct deposit your refund in up to three accounts, so you can send part directly to your emergency fund.

If no windfall is imminent, check your checking account. Leave a small buffer so that you aren91裸聊视频檛 at risk of overdrawing and put anything else in the emergency fund to earn interest, Lamb says.

There91裸聊视频檚 no ideal amount to keep in your checking account. But both financial planners warn that having a lot of extra 91裸聊视频渃ushion91裸聊视频� in a checking account carries the temptation to spend it.

PLAN FOR NON-EMERGENCIES

If you91裸聊视频檙e building the habit of saving for emergencies, use that muscle to plan for other expenses.

Financial experts often use the terms 91裸聊视频渋rregular expenses91裸聊视频� and 91裸聊视频渦nplanned expenses.91裸聊视频� An unplanned expense is something you don91裸聊视频檛 foresee, such as an illness or car repair. Irregular expenses are predictable costs that come up during the year 91裸聊视频� think of car registration fees or holiday season spending.

Ideally, an emergency fund shouldn91裸聊视频檛 be used for irregular expenses, Lamb says. Instead, build a separate pool of money for them.

91裸聊视频淪it down and look at last year91裸聊视频檚 worth of spending and look at the things that popped up periodically,91裸聊视频� she says. 91裸聊视频淭hink about the coming year and how that might change. Figure out the annual amount and divide by 12. That dollar amount is what you set aside every month in an irregular expense account.91裸聊视频�

USE THE MONEY WHEN YOU NEED IT

Don91裸聊视频檛 be afraid to use your emergency fund when you need it. Knowing the difference between unplanned and irregular expenses can help you decide when to tap it.

If the alternative is maxing out your credit cards or taking a high-interest loan, it91裸聊视频檚 cheaper over the long term to use your cash, then immediately start rebuilding the fund.

Amrita Jayakumar Of Nerdwallet, The Associated Press

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