Start an emergency savings fund

Maintaining an emergency savings fund should always be a top priority. In the current economy, this is especially true.

Creating – and following through with – an emergency savings plan is a great way to safeguard yourself from feeling the effects of a down economy. So what makes an emergency savings fund different from a regular savings account or savings fund? Not that much.

An emergency savings fund sounds a lot different than a savings account but the two are very similar in reality. One of the main differences lies in the mindset of the saver. The money accumulated in an emergency savings fund should be considered “untouchable.” That is, the money is strictly for emergencies and should be left alone unless an emergency arises.

That said, an emergency fund can make use of savings accounts that offer higher interest rates in return for less access to the money. For example, you may be able to make use of a money market account that has a limit of three withdrawals per month. You shouldn’t have to worry about restrictions for an emergency savings fund.

Recommended reading: Emergency savings strategies