When setting up an emergency fun it helps to start with necessities like food, rent, and important bills before looking at savings. The old strategy is to build a six-month cushion of money where one can survive for this time without new money coming in. The emergency fund should not come at the expense of a retirement fund. Some experts will agree that there doesn’t necessarily have to be a set size to a fund’s amount but having one rather than none at all is most important.
Key Takeaways:
- One financial planner says a lot of millennials mistakenly put all their extra income into retirement savings.
- The advisor believes emergency fund savings should be prioritized over long-term savings.
- There’s no magic number as to how much savings should be, just so long as it becomes a habit.
“She started by calculating her expenses — including food, rent and health expenses — and began putting a percentage of the remainder into a savings account at the end of each month.”
