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Federal Credit Union San Antonio | IBEW Credit Union | CPS Credit Union

BUILDING YOUR RAINY-DAY FUND

From the pandemic to the winter storms, Texans have seen our fair share of emergencies lately. These crisis events—and others your family may have experienced—serve as reminders of how important it is to have emergency cash set aside. But before you stash a stack of bills under your mattress, let’s talk about why and how to build up those funds, how much you should have on hand, and where to keep it.

An emergency fund is money you set aside for unexpected large expenses or job loss. It’s often called a “rainy day” fund because it’s meant only to be used on those rare occasions when things aren’t financially going your way. These events most often center around:

• A job loss
• Medical expenses
• Auto or home repairs

Only 39% of Americans have enough in savings to pay for a $1,000 emergency expense in cash.

The rest would need to borrow money, use a credit card, or take out a loan to cover it. The types of emergencies we note above, though, can set you back thousands of dollars. Borrowing or using credit on that amount can affect your overall finances and credit score, especially if you’re unable to secure a low-interest payment plan or, worse yet, you’re unable to pay it back under the terms they set.

A good rule-of-thumb is to save at least three to six months’ worth of income as your emergency fund.

That may seem like a lot, but when a huge expense or a job loss happens, it can take quite a while to catch back up on bills. Don’t get overwhelmed by the task, though. Save what you can when you can and, incrementally, your emergency fund will grow.

Consider the following smart money moves that can help:

• Don’t ignore high-interest credit card balances and other credit-affecting debt. While having a large emergency fund is a great idea, it’s vital to balance putting money away in savings with paying down your debt.
• Make room for emergency savings through some creative thinking. Consider whether it’s time to refinance your car, for instance, or cut down on other monthly expenses.
• Separate your emergency fund into its own account, which can help you keep track of your progress while reducing the chance of unintentionally spending it. A savings account that accumulates interest can be a great way to help that money grow over time.

And if an emergency happens before you have a rainy-day fund fully ready, don’t panic.

As a CPS IBEW Federal Credit Union member, you have access to low-interest funds through flexible loan options like a Fast Cash Loan for up to $750 with a 6-month term or a personal loan for bigger expenses.

Along your financial journey, there will be sunny days, and there will be rainy days.

Treat your emergency fund through an interest-bearing savings account along with the other low-interest tools mentioned above like an umbrella, helping you get to your next destination safe and dry when the “weather” isn’t cooperating.