Uversitylife is a free and unbiased way to help you figure out how much you should be saving for emergencies. As a responsible individual, you know to have savings ready in case of an emergency. But what about more typical expenses like car repairs or groceries? In this article, we’ll outline the basics of how much you should save for common emergencies and provide tips on making that happen.
How much should you save for emergencies?
While there’s no one answer to this question, it’s important to have an emergency savings plan in case of a financial emergency. Here are some guidelines to help you figure out how much you should save:
-Start with $250 per person per year. This will cover three months of basic needs like shelter, food, and utilities.
-Increase your goal by $50 each year until you reach $1,000. This will give you enough money to cover six months of expenses.
-If you can’t afford to save that much each year, start with $500 and work your way up. Even 10 percent of your income can go a long way in case of an emergency.
Different types of emergencies
A few different types of emergencies can happen to you, and the amount of money you need to save for each one will vary.
The most common type of emergency is a financial emergency. This means you run out of money and can’t afford to pay your bills or buy food. To avoid becoming financially dependent on others, it’s important to have enough money saved up in case of a financial emergency.
Another type of emergency is an illness or injury. If you have an illness or are injured, you may need medical treatment that you can’t afford to pay for yourself. Make sure you have enough money saved up to cover unexpected medical expenses.
Finally, sometimes things just don’t go as planned, and something bad happens. Maybe someone in your family gets sick, there’s a natural disaster like an earthquake, or your car breaks down. Any of these events can lead to unexpected expenses. Make sure you have enough money saved up to cover these types of emergencies as well.
How to figure out how much to saving for emergencies
Figuring out how much to save for emergencies is a tricky question. There are a number of factors you should consider, including how often you expect to use the money and how much you think you will need in total. Here are some tips to help you figure it out:
Start by estimating how often you will need to use the money in case of an emergency. This could be something like twice a year or every time you have a big expense. Multiply that number by your annual salary to estimate how much money you would need on average.
Then factor in any other expenses that may come up during an emergency, like car repairs or home repairs. Add these amounts together, and divide that total by 12 to get your monthly savings goal. If your monthly savings goal is $200, put $20 away each month as your emergency savings target.
If you’re not sure how much money you’ll need in total, go ahead and stash away 3-6 months’ worth of expenses in case of an emergency. That way, you won’t have to worry about figuring out exactly how much to save each month.
If you want to make sure you have enough money saved up for emergencies, it’s important to have a plan. There are a few key things to keep in mind when thinking about how much money you should save for emergencies: your overall budget, your monthly expenses, and the amount of time you think you’ll need to cover those expenses. Once you have an idea of what numbers work for you, start setting some aside each month so that you’re always prepared.