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Do You Have an Emergency Fund and is it Properly Funded? Thumbnail

Do You Have an Emergency Fund and is it Properly Funded?

Whatever your financial situation, it is important to always be prepared for the unexpected. An emergency fund is an absolute necessity for even the most fiscally responsible, as unforeseen costs such as the loss of a job or an emergency medical bill can easily result in a financial crisis without proper planning. However, according to a recent study done by the Federal Reserve Board of Governors, only 48% of Americans have set money aside for three months of expenses for such an event.*

An effective emergency fund should cover at least six months of living expenses. In order to achieve this, you will need to review your expenses and see where you can begin to save. For monthly expenses, such as car and house insurance and credit card interest payments, it is best practice to review your policies annually and call to see if you are eligible for lower rates. In addition, cutting back on small unessential items like expensive coffees and take-out dinners can start to add up to real savings. Making changes in your spending habits can be difficult, so try starting with small amounts and then increasing it gradually. Just savings $10 a day can add up to $3,650 a year. Similar to your retirement account, you will begin to form a habit of putting money aside each month for your emergency fund. You may also want to consider putting away a portion of your yearly bonuses and tax refunds in order to augment that healthy rainy-day fund.

Once you decide on how to begin saving for your emergency fund, your next step is to make sure to keep this emergency fund money separate from your living expense funds. Under no circumstances should the money allocated for your emergency fund be used for non-emergency expenses! It is extremely important to keep your emergency funds independent from your primary account. Additionally, your emergency fund should be highly liquid, meaning you should be able to access and use this money immediately. This way, if a situation ever arises where you are forced to dip into your emergency funds, the money will be readily available. By setting up an emergency account now, you will be able to enjoy peace of mind knowing you can weather anything life throws at you.

*Federal Reserve Board of Governors Report on the Economic Well-Being of U.S. Households in 2016 (page 26)

Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with just over $2 billion in assets under advisement and 22 employees in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit or give us a call today at 888-231-6372

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