Cash reserves are essential for individuals, families and businesses to protect against emergency events!
The Walton Financial Group in Barrie, Ontario will help you create a cash reserve fund plan
Having an emergency fund is more important than ever. Despite historic unemployment due to the Coronavirus, many workers who kept their job didn’t have anywhere to spend disposable income. The current economic climate highlights the importance of having emergency cash reserves at any income level. It’s also a perfect opportunity for individuals with extra cash savings to properly set up their emergency fund. But how much cash do you need in an emergency fund and where should you keep it?
As the name suggests, an emergency fund is cash you keep in case of an emergency. Unexpected financial events can come in many forms. Perhaps you unexpectedly lost your job, have a major home repair, or medical costs to pay for. In today’s economy, pay cuts are common as businesses suffer major hits to their revenue.
Instead of taking out a high-cost loan or putting the expense on a credit card (if those are even options), the savings in an emergency fund can be used to cover the cost.
Stockpiling cash savings in one account without a plan could be a missed opportunity. We all need money in the bank, but there are downsides of keeping too much cash or too little…or saving it in the wrong place entirely.
As a rule of thumb, consider keeping between three and six months of fixed expenses in cash as an emergency fund. If you’re in a two-income household, consider the lower end.
Keep in mind this isn’t a hard-and-fast rule. Your personal situation will dictate how much cash you’ll need. If you’re concerned about losing your job in this economy or are a business owner, you may need more in savings, perhaps even a year.
The team of financial advisors at the Walton Financial Group in Barrie, Ontario will review your personal or business finances with you and help you create a cash reserve fund plan that fits your situation as an individual, a family or for your business.
