Today's DueNorth Insight - Emergency Funds

Today's DueNorth Insight - Emergency Funds

July 27, 2021

In today’s DueNorth Insight, I’m going to talk about the importance of having an emergency fund. A 2021 study from found that just 39% of Americans can afford an unexpected $1,000 expense. On the same court, unsurprisingly, 41% of Americans with a credit card carry a revolving balance.

These two statistics help demonstrate the importance of having an emergency fund. Having an emergency fund helps you take on life’s unexpected trials such as job loss, medical bills, home and auto repairs.

So what is an emergency fund? Simply put, an emergency fund is a separate fund that is put aside for unexpected or unplanned events. It is generally held in a liquid account, such as checking or savings to allow the individual easy access to withdraw without any sort of penalty or fee.

A general rule of thumb is 3-6 months of nondiscretionary expenses. Such as car payments, house payments, rent, utilities, things like that. Things you can’t go without.  However this is highly dependent on the number of people in your household, and the amount of income earners in the home. Typically a single income earner will be on the higher end of 3 to 6 months. Whereas a dual income household may be closer to 3 months.

Having an emergency fund can give you the comfort and piece of mind to navigate life’s unknown obstacles. And that’s todays DueNorth Insight.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.