A: Definitely! Even with the best planning, surprises can take you off course — it might be unexpected car repairs or a leaky roof. Add on the expense of an emergency visit to the hospital and it’s easy to see how things can quickly add up.


A rainy-day fund will come in handy to cover unexpected expenses and can help keep you on track with your investing goals — or prevent you from running up debt.


Some people think they can rely on their credit card in an emergency, but that can compound your problems if you’re unable to pay off the bill quickly. You may end up paying interest charges on the amount borrowed for months — or worse, years — into the future. For example, paying off the monthly minimum of $20 on a $600 charge will take you three years and cost you $157 in additional interest if you assume a 15% annual percentage rate (APR). If you pay off the bill in two years, you’ll pay $99 in interest charges, and over one year you’ll pay $50 in interest charges.


To avoid falling into a situation where you have to rely on your credit cards, I recommend setting aside three to six months of living expenses in a savings account you can access quickly (like a savings or money market account). If you’re not sure about these expenses, a good place to start is your online banking history. You can go back and see what your bills have been to get a sense of what you actually need each month and what you might be able to cut back (eating out, shopping trips, movies, etc.) Finally, remember that if (when) you tap into your emergency fund, to try to rebuild the balance as soon as you can so it will be there in case of another emergency.


If you have more questions or would like to discuss how to make this work for you, please give us a call at 855 488-9536 weekdays 8 a.m. to 5 p.m.