Why Emergency Funds Should Be a High Priority

We’ve all read the news: The amount of student loans the nation has accumulated is staggering.

As of last year, the Federal Reserve System reported that college debt reached $1.6 trillion, with 65% of graduates earning their degrees with an average debt of $29,000.

What is an emergency fund and why do I need it?

Simply put, an emergency fund is money stashed away for emergencies. 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. CNBC’s expert guide on emergency funds recommends starting with an aim of saving $2,467 for low-income households.

Due to its nature, an emergency fund should be liquid, but that doesn’t mean you should be hiding money in a piggy bank.

Where do I put my emergency fund?

It’s best to separate it from your checking or main savings account. Two popular options for doing so are high-yield savings accounts and money market accounts.

A high-yield savings account is a type of savings account that earns you a higher interest than traditional ones.

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