Trick-or-treat? Halloween is a time for dress-up, fun and delicious candy. But it's also a time to think about your financial well-being. An unexpected financial crisis can be like getting caught in the dark without a flashlight. We want you to be prepared.
An emergency fund is a savings account that you can use to cover unexpected expenses, such as a job loss, medical emergency, or home repair. Financial experts recommend having at least three to six months of living expenses saved in an emergency fund. Think of your emergency fund as the candy you put in your pumpkin bucket when trick-or-treating. As much as you want to eat the candy, you wait. There may be a day you need it more, and it makes you feel better to know you have it saved for a rainy day.
An emergency fund can help you avoid financial scares during Halloween and throughout the year. Here are a few examples of unexpected expenses that an emergency fund can help make less scary:
- Did you remember to blow out the candle in your Jack-o'-lantern? You purchased and carved your pumpkin. You place a candle in your perfect Jack-o'-lantern, not knowing danger is lurking. To your horror, you must pay to repair your home because of an unsupervised candle.
- On your way to buy a costume, your car breaks down. Can you make it to the Halloween party? The costume is decided on, and you are ready for spooky holiday fun. Here is the trick: your car breaks down, but there is a treat. You can afford a tow truck and repairs because you have an emergency fund—time to get to the party and do the Monster Mash.
- Buzz Lightyear and Woody overate candy, and now there is a scary trip to the emergency room. The kids couldn't resist all the delicious Halloween candy, and now you're paying the terrifying price- literally. With an emergency fund, you can afford to pay medical bills without going into debt.
An emergency fund is an essential part of any financial plan. By building an emergency fund, you can avoid financial creepy-crawlies and protect yourself from unexpected frights. Start by:
- Set a goal. How much money do you need to save in your emergency fund? A good starting point is three months of living expenses, but you may want to save more if you have a lot of debt or other financial obligations.
- Make a budget. Once you know how much money you need to save, create a budget to help you pursue your goal. Look for ways to cut back on unnecessary expenses to save more money.
- Set up automatic transfers. One of the best ways to save money is to set up automatic monthly transfers from your checking account to your savings account. This way, you'll save money without thinking about it.
- Only dip into your emergency fund if you absolutely have to. Your emergency fund is for unexpected expenses, so avoid using it for other things. If you need to use your emergency fund, replenish it as soon as possible.
Some of you may enjoy a scary Halloween movie or a fright or two, but when it comes to your finances, let's keep the creepy-crawlies away by being prepared. The Dixon Financial Group, LLC LPL Financial Advisors may not be The Ghost Busters, but we can help you exterminate the creepy crawlers so you can have a less scary future. Contact our office today for any estate, financial, and retirement planning needs.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual