The next time an emergency strikes, make sure you are financially protected. Wealth Building Way explains how to set up an emergency fund in their new guide for millennials.
As a millennial, you're probably good at making money by now, but can you say the same about your saving habits?
Although saving might not be at the forefront of your mind, it’s important to consider what would happen in an emergency. Would you need to get a loan? Or open another credit card? Maybe you’d have to rely on the bank of mom and dad for the ‘nth’ time.
Wealth Building Way is here to explain how the financial buffer of an emergency fund can help you avoid unexpected debt for a brighter financial future. Find out more at https://wealthbuildingway.com/why-is-an-emergency-fund-essential-for-every-millennial-uncovering-financial-stability-secrets/
The guide comes in response to recent data published by Statista reporting that the total public debt of the US in December 2023 totaled 34.2 trillion dollars. Wealth Building Way explains how owning an emergency fund can help you handle unexpected expenses, such as medical bills or car repairs, without relying on high-interest credit cards and loans that can quickly lead to debt.
“An emergency fund is a crucial component of any financial plan that serves as a safety net for unexpected expenses or life events,” says Wealth Building Way. “Its primary purpose is to buffer against unforeseen circumstances that could otherwise derail an individual’s short- and long-term financial goals.”
According to the experts, an emergency fund should hold at least 3-6 months’ worth of living expenses and must be easily accessible via a savings or checking account. Typically, emergencies require immediate access to funds so it is vital to check you can withdraw this money without delay.
As well as ensuring easy accessibility, you should also look out for savings accounts with competitive interest rates and minimal fees. Wealth Building Way recommends setting up automatic transfers into an emergency fund, which removes the need for active management and self-discipline. By setting up a fixed, monthly direct deposit, you can't talk yourself into spending the money elsewhere.
The guide also shares tips for managing debt whilst simultaneously building an emergency fund. The experts stress the importance of prioritizing any high-interest debt, such as credit cards and student loans, before tackling other areas of your financial strategy. “If you have multiple high-interest debts, consider consolidating them into a single loan with a lower interest rate to reduce your monthly payments and pay off your debt faster,” suggests Wealth Building Way.
With an emergency fund, you can spend less time worrying and more time living. For more advice on how to build yours, go to https://wealthbuildingway.com/why-is-an-emergency-fund-essential-for-every-millennial-uncovering-financial-stability-secrets/
