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Planning for the Unexpected – 4 Questions to Ask about Emergency Savings

Life can be unpredictable with unplanned events arising when we least expect it. Whether it’s a layoff, vehicle or house repair or medical emergency, being prepared for the unexpected helps alleviate stress and unwanted debt. Building up an emergency fund over time provides that extra layer of comfort and protection.

Here are 4 common questions about emergency funds.

  1. How much should you save?
    A general rule is to save 3 to 6 months’ worth of essential expenses. If you have a family, you may want to save more so you feel at ease knowing your family’s expenses are covered. This extra money provides a valuable cushion that can help you recover from an emergency quickly without having to tap into your retirement account or incur more credit card debt.
  2. How do you build an emergency fund?
    Keep track of your essential monthly expenses to help you gauge what you may need to save so you can set a specific savings goal. Once you set this goal, automate it. Set up automatic recurring transfers from your checking account into a savings account.
  3. How quickly should an emergency fund be replenished?
    Don’t be afraid to use your emergency fund when needed. However, make sure you differentiate a true emergency vs. a non-essential expense. If you spend it down, work to build it back up as soon as you can so that saving becomes an instilled habit.
  4. Should it be a separate account?
    It may be a good idea to keep your emergency fund separate from your regular checking account, so you’re not tempted to use any of this money for a non-essential expense. Consider opening a separate investment account to make the most of your savings.

Be prepared for life’s inevitable unexpected expenses. Find out how to get your emergency fund started by reaching out to a Jemma Financial Advisor.

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IMPORTANT NOTICE

You are now leaving the Jemma Investment Advisors, LLC Website and will be entering the Charles Schwab & Co., Inc. ("Schwab") Website. Schwab is a registered broker-dealer, and is not affiliated with Jemma Investment Advisors, LLC, or any advisor(s) whose name(s) appears on this Website. Jemma Investment Advisors, LLC is independently owned and operated. Schwab neither endorses nor recommends Jemma Investment Advisors, LLC. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with Jemma Investment Advisors, LLC under which Schwab provides Jemma Investment Advisors, LLC with services related to your account. Schwab does not review the Jemma Investment Advisors, LLC Website, and makes no representation regarding the content of the Website. The information contained in the Jemma Investment Advisors, LLC Website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.

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