I love my emergency savings accounts because they grant me the peace of mind of knowing that if anything unexpected occurs throughout the year, fortunate or unfortunate, I will be able to cover the cost(s) of whatever it is without the risk of running too low on overall funds.
A fortunate scenario where I would need some quick extra cash would be if a black swan event occurs, and now the overall market(s) crashes. I will now have some stacks stashed away to take advantage of all the significant dips in my favorite companies and cryptocurrencies, by purchasing more shares, coins, and tokens.
An unfortunate scenario where I would need some quick extra dough would be if a tragedy strikes. For example: my cat gets sick and now I have a hefty veterinary bill to pay, or my car breaks down, and now I need to spend all kinds of money to repair it so I can get it back on the road.
Emergencies happen, they are a part of life, and being prepared for them is the best line of defense.
I personally have two emergency savings accounts, and they are both traditional bank savings accounts.
Please note that they have special kinds of emergency savings accounts that you could setup with your employer, or maybe via some outside entities, but they are generally only for medical emergency use purposes. I don’t have much information on these, since I do not use them personally, but it is something you could easily investigate on your own.
I personally prefer to have full control over my emergency savings accounts, and the way that I have them situated grants me the option of pulling my money out of them at any time, for any reason whatsoever.
The ones I use personally are just your typical savings accounts and could be opened at most any traditional bank. They offer very tiny interest returns, so don’t expect to pull in much passive income, unless you’re a baller and have millions upon millions of dollars in them.
The purpose for me is not to get rich off them, they are strictly used for emergencies only.
As mentioned above, at the moment I have two emergency savings accounts, and in the future when I am more financially sound, I plan on having one more for a total of three, which will be my personal max.
The method I use right now is simple:
It consists of me putting $50 into each of my emergency savings accounts every time I earn a paycheck, which at the moment is every two weeks, and once per month.
Due to the fact that I still have some outstanding debt from the sunsetting of my former business, on the first day of each new year, I withdraw all of my funds from both emergency savings accounts, and use all of that money to pay down my debt… assuming of course I had no fortunate or unfortunate emergencies occur throughout the year.
As soon as I become more financially upright, I will be putting $100 into each of my emergency savings accounts per paycheck, which at this point would be three different accounts, and on the first day of each new year, I will withdraw whatever monies I have in them passed $500.
This way all three of my emergency savings accounts will always have at least $500 in them throughout the year, just in case something unexpectedly creeps into my life.
I will use all the money I took out of my emergency savings accounts passed the $500 mark each year in the future for a well needed vacation, use it to increase my investment portfolios, or just simply use it to purchase myself or someone I love a well-deserved gift.
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