An attorney and financial adviser, Geoffrey H. Garrett handles everything from trust administration and estate planning to probate. Working with trusts and estates through a self-named law firm in California, Geoffrey (Geoff) Garrett possesses over three decades of experience in the legal field. Meanwhile, he provides financial coaching to clients through Erickson Wealth and Tax Management.
An essential part of financial coaching is setting up an emergency fund. This fund goes toward covering unplanned expenses, like home repairs, along with providing coverage for such events as a loss of income. Considering many experts recommend saving between three and six months’ worth of expenses in an emergency fund, the process takes time and relies heavily on meeting small goals that build up. At first, saving $500 is plenty for an initial goal that builds upon itself until individuals have the recommended amount put aside.
However, starting small only gets people so far. Saving is difficult when the money is constantly being seen. For this reason, emergency funds are best kept separate from a person’s regular savings and checking account so the money doesn’t tempt them. At the same time, accessibility is key. Placing the emergency fund in a high-interest savings account or other high-liquidity vehicle ensures it’s easily accessible when needed while still being out of sight.
Finally, individuals must stick to their savings plan once it’s all set up. This may require setting up automatic deposits so money is added to the fund without any effort. It also requires routine review of the plan so that it remains attainable and realistic as a person’s life changes. Further, it’s essential that a person continues saving after reaching their goal. Even if they put aside six months of expenses as a cushion, having extra money on hand provides additional relief and lessens the impact that emergency situations have on a person’s finances.
