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Get Rich Slowly has been one of my favorite personal finance blogs for quite some time. In fact, I have written a guest post for the blog in the past, and hope to do so again in the near future. One of my favorite posts at GRS is entitled “How and Why to Start an Emergency Fund.” If you have never pondered these two questions, you are not doing your finances any favors. With that being said, you can be well on your way to starting an emergency fund in no time at all if you have the proper information on your side.

To build on the post at GRS, here are four questions to answer if you are interested in starting or bettering your emergency fund:

1. How much money do I need to keep in my emergency fund? This can be difficult to answer, and everybody has their own opinion. Personally, I like to keep one year’s worth of monthly expenses in this type of account. This way if something were to happen I could pretty much take off work for a year and still live a similar lifestyle. If this is not possible for you, start with a smaller goal and continue to build your emergency fund each month.

2. How should I fund my account? The best way to do this is to take money out of each paycheck and immediately deposit it into your emergency fund. In fact, you may even be able to set up a direct deposit with your employer so that you never see the money. This is a great option because it helps to ensure that you do not spend the money before it makes it to your account. For me, this is difficult because I receive payments throughout the month. But even then, I always make sure that I have enough leftover after expenses to stock a few bucks away in this account.

3. When should I use my emergency fund? You need to answer this question based on the situation that you are in. For instance, an emergency fund is a great place to turn for unexpected expenses such as medical bills or car repairs. If you can pay for something without dipping into this find you should consider doing so.

4. What if I use all the money in my emergency fund? This is a common question because there may come a time when your emergency fund is bone dry. The best way to combat this issue is to always make sure that you are adding money each month. This way, even if you do have to withdrawal all the money, you can get started saving once again soon enough.

Hopefully, these four questions and answers, accompanied by the article at GRS, will allow you to better care for your emergency fund. 

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