Emergency savings, contingency fund? Who has one? How much do you have?

I suspect the answers are along the lines of:

• What?
• How do I get one?
• How much do I need?

Without any warning, an emergency such as a sick family member, job loss or car repairs can throw a wicked curve ball. Few of us have emergency savings. You may have a plan in terms of pulling out a credit card or borrowing some money but this means paying extra.

Most of us avoid amassing contingency savings because there are many other things we’d like first. There is however, nothing worse than being faced with an emergency and having the added stress of finding the money to cope with it. Things happen along the path of life that we face – it’s not a matter of if, it’s a matter of when.

Here are some tips to grow an emergency savings account:

• Open a separate account
• Set up a monthly savings plan – transfer a set amount of money into this account each month
• Add ‘found/extra’ (tax returns, overtime, bonus) money

How important is it? That’s for you to decide. It can be a huge stress relief to know that you have a little set aside for when you need it.