Why Emergency Funds Should Be a High Priority
So why should building an emergency fund become a top priority? In a way, it makes financial sense to pay off student loans as soon as you land a job.
What is an emergency fund and why do I need it?
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.
How much should I put into my emergency fund?
The size of your emergency fund is a personal matter, but there are some general rules you can follow.
Where do I put 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. It’s best to separate it from your checking or main savings account.
A high-yield savings account is a type of savings account that earns you a higher interest than traditional ones.
The more often the interest is compounded, the higher your interest becomes on your emergency fund.
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Once you’ve figured out the right balance between debt repayment and savings, the next step is to look at investment opportunities.
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