When to use an Emergency Savings Account
Create an emergency fund to cover expenses during financial difficulties
Financial advisors commonly suggest that individuals and families should build an emergency fund equal to six to nine months of ordinary household expenses. In the event of an unexpected occurrence like the loss of a job or a health emergency, you and your family will have short-term income to cover bills like the mortgage, car payments and utilities. The cushion provided by an emergency fund gives you the chance to keep your household running while you get your financial affairs back in order.
Consider building an emergency fund to guard against job loss or decreased income
In uncertain financial times it's important to have a backup plan in the event of a job loss. If you lose your job, an emergency savings account can provide for you and your family's immediate needs as you look for a new position. When you have an emergency fund set aside for your family, you can focus on pursuing employment, rather than worry about your family's needs. Use your emergency savings fund to cover daily expenses like grocery bills, gas, household cleaning items and toiletries.
Unbudgeted medical expenses
In the event that you or a family member needs serious medical care, the bills could add up quickly. Building an emergency fund can help ensure you not only have extra money to pay these bills, but also cover the loss of income from any time you need off work. While it's sometimes hard to think about, an emergency savings account helps you prepare for the worst. What happens if you're out of work and get in a car accident or one of your children needs ongoing medical care your insurance doesn't cover? Create an emergency fund to cover your family's costs in the worst case scenario. Hopefully you never have to dip into it, but the added sense of security knowing it's there will give you peace of mind you need.
Emergency savings funds can provide money for necessary home repairs
While there are obviously many joys to home ownership, there can also be some surprises. These can occasionally be costly ones. When you need to replace the roof, the old furnace suddenly gives out or the foundation shifts or leaks, repair bills can quickly increase. An emergency savings fund helps you stay prepared for these expensive home repairs. However, it's important not to look at your emergency savings account as a "rainy day fund". You probably don't want to use this money for aesthetic home renovations, but instead keep it safely tucked away in case of more serious, costly repairs.
Use your emergency fund to cover car repairs
For most Americans, their automobile is not a luxury item. On the contrary, it's often a necessity for their jobs. If you get into an accident or your car breaks down, you may need extra funds to pay for the repairs. An emergency fund could provide you with money for the repair, a rental car, or cash for public transportation. Make sure you take all of these expenses into account when building your emergency fund so you'll be prepared for any car-related repairs or unforeseen transportation costs.
Learn how to build an emergency fund from Citizens Bank
Citizens Bank has a number of convenient and secure savings products that can help you begin building an emergency fund to take care of your family in case of financial difficulties. Whether you want a money market account or a standard savings account, we'll set you up with the right tools to build your emergency fund. Plus with features like Steady Save® and GoalTrack Savings℠ you can make direct deposits without even thinking about it. Speak with a Citizens Bank representative at 1-877-360-2472 for more information, or open an account online today.