3 Emergency Fund Mistakes to Avoid
What should you do with your emergency once you’ve built it up?
Lori wants to know:
I’ve accumulated a $30,000 emergency fund and am wondering how to manage it. First, where should I invest it? And second, should I use some of the money to pay for a car?
ANSWER: Congratulations on building up your emergency fund! To manage it the right way, here are 3 mistakes to avoid:
Mistake #1: Never invest your emergency savings.
As tempting as it may be to invest your emergency money, don’t do it! Money you invest is always subject to some amount of volatility and risk, which makes it suitable for your long-term financial goals only. If you invest emergency money, its value could plummet at the exact moment you desperately need it. So remember that the purpose of an emergency fund is to keep you safe and give you financial security if your doorstep is darkened by an unexpected, devastating financial hardship, such as the loss of a job or an illness.
Mistake #2: Don’t let your emergency savings sit idle.
Don’t take the opposite approach with your emergency money and tuck it under the mattress. {C} Read More »