Tip 3: Save Now! You never know when disaster strikes!

Bad things happen all the time and you need to be prepared for any accidental disasters. As part of this it is important to have savings that you can draw on if you need money. Many people have no savings and in the event that some disaster did strike them they would find themselves in real trouble. This is not the sort of thing that you can allow to happen. If you have no savings for an emergency make sure that you start saving right now.

There is a lot of talk about making sure that you save enough money for retirement but you also want to make sure that you have savings in case disaster strikes and you need to have money available right away. The most obvious reason for this is in the event that you lose your job. If that happens you are going to need to have savings to tide you over until you are able to find another one. There are plenty of other disasters that can strike as well like your home burning down. You should have insurance to cover this but it can take a couple of months before you actually get the insurance settlement. You need to have money available to tide you over until then.

The big question then becomes just how much savings do you need to have for an emergency. The general belief is that you need to have enough to live on for a period of three months. This is just a general guideline but it is something that you should keep in mind. Obviously you will need to look at your situation and assess how much you are going to need in an emergency.

One thing that you are going to have to consider when you are saving money for emergencies is that you need to keep it in a place where you have easy access to it. This is not the sort of thing that you want to be investing in stocks or in bonds that you can't cash out of quickly. You need to have the money in an account that you can access immediately if you need to have access to it. This is why most people put theirs into a savings account.

The other thing that you need to be careful is to make sure that you don't invest your emergency fund in an account that fluctuates in value. This is why you don't want to put it into something like stocks. If the market takes a nose dive and then the next day you find that you need your emergency fund you could have a real problem. Most people don't like to have their savings earning little return which is why they put it into the stock market. However with your emergency fund the most important thing is safety. A savings account is your best option.