There are three key questions to ask yourself.
As layoffs in the tech industry and elsewhere increase, many individuals and families are struggling to find solutions.
With so many family budgets tightening, a major spending need has loomed large.
DON’T MISS: The hard-hitting layoff message Amazon CEO Andy Jassy wrote to workers
The spending priority in question is emergency funds, and personal finance expert Dave Ramsey now offers some sage advice on how to know if a situation calls for diving into yours.
Ramsey says there are three questions to ask before making a decision to use the money you’ve saved for emergencies.
Is it unexpected?There’s a big difference between suddenly losing your income and forgetting that it’s someone’s birthday.
Is it absolutely necessary?Know the difference between a need and a want.”
It is urgent?Does it need to happen right now, or can you save up and do it later?
“Slow down and take the time to make smart financial decisions,” Ramsey tweeted on March 25.
Financial emergencies take many forms, including car accidents, medical bills, broken appliances, loss of income, and suddenly damaged property like cell phones.
“Establishing a dedicated savings or emergency fund is an essential way to protect yourself, and it’s one of the first steps you can take to start saving.” writes the Consumer Financial Protection Bureau (CFPB). “By setting aside money, even a small amount, for these unplanned expenses, you can recover faster and get back on track to reach your bigger savings goals.”
The CFPB suggests that a good way to build an emergency fund is to make saving automatic.
“A common way to do this is to set up recurring transfers through your bank or credit union so that money is automatically transferred from your checking account to your savings account,” the CFPB said. suggests. “You can decide how much and how often, but once you’ve set it up, you’ll be making constant contributions to your savings.”
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