Setting realistic goals a vital part of establishing an emergency savings fund

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.”

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