Contributions to 401(k) plans are intended to be used for retirement and as a result, withdrawals are generally taxable and potentially subject to ear...
401(k) loans! Should you take one?
October 30, 2017
1. Pay your bills on time. Pay more than the minimum required amount if you can. Set up a recurring payment online to avoid late payments.
2. Pay dow...
5 Tips to Improve Your Credit Score
May 22, 2017
Whether you’re a busy sole proprietor, a boutique shop owner, or a restaurant owner with employees who depend on you, accounting software is a powerfu...
Is a Lack of Accounting Software Hurting Your Small Business?
January 1, 2018
Emergency fund: Why you need one
February 1, 2017
The reason to have an emergency fund is simple: You don’t know what’s going to happen in life. Money magazine states that 78% of us will have a major negative financial event in any given 10-year period. You need to have cash ready to help you survive when that happens. The account set up for emergency funds should contain enough money to cover 3 to 6 months of living expenses.
These unexpected events can be stressful and costly such as the loss of a job, an illness or a major repair and maintenance. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to draw from your 401k or a credit card which are very expensive financing options.
If you are part of a two-income household or you’ve had a steady job for several years, then a 3-month emergency fund is probably fine. However, if you are a one-income family, or a self-employed, then a 6-month emergency fund is a better idea because a job loss would mean you couldn’t pay the bills.
Your emergency fund should be liquid, meaning you need to keep it in a place where you can get to it easily and quickly. The best option is a simple checking account or money market account that comes with a debit card or check-writing privileges. Although the emergency fund may not earn you interest, it’s giving you peace of mind. You sleep better at night when you have cash saved. That is a great investment return on your money!
Share on Facebook
Share on Twitter
I'm busy working on my blog posts. Watch this space!