Emergency Funds 101: Why You Need a Savings Account
Maybe your car won’t start. Or the electricity goes out, requiring you to replace all the food in your refrigerator. Emergency funds can help with that. But first, you’ll have to build up those funds. It’s simple: just set up a traditional savings account and add to the balance regularly.
Even if your budget is tight, allocating funds to an emergency savings account can be of great benefit down the road when you need it. We’ll consider the value of an emergency savings account, how to set one up, and how to make your savings account work for you.
What Are Emergency Savings Accounts Used For?
Financial stability comes from being prepared. That’s where emergency savings accounts come into play. These financial safety nets shield you from the unexpected twists and turns that life can throw your way. They can be helpful for:
Covering Unforeseen Expenses
Life is unpredictable. Unexpected expenses can arise at any time, such as medical bills, car repairs, or home maintenance. An emergency fund can cover these costs without derailing your budget.
Minimizing the Impact of Job Loss
What would happen if you lost your job tomorrow? Your emergency fund can provide a financial cushion to cover your essential living expenses until you find a new job or stabilize your financial situation.
Without an emergency fund, you may be forced to rely on credit cards or loans to cover unexpected costs. This can lead to high-interest debt, making it more challenging to get back on track financially.
Mitigating Stress and Anxiety
Knowing that you have a safety net in the form of an emergency fund can reduce stress and anxiety associated with financial uncertainty. It provides a sense of security and confidence.
Providing for Family Emergencies
Sometimes, you may need to support a family member in a crisis or have unexpected travel expenses to get to someone in need. Having an emergency fund can allow you to help without jeopardizing your own financial stability.
Weathering Economic Downturns
During economic recessions or financial crises, job security may become uncertain. An emergency fund provides a financial buffer until the situation improves.
Taking Advantage of Opportunities
Having an emergency fund can also enable you to seize financial opportunities, such as investing in a promising venture, buying a discounted asset, or taking advantage of a career opportunity.
It’s Easy to Open an Emergency Savings Account Today
Convinced an emergency savings account is for you? Let's open one for you so you can start adding to the balance.
Saving starts with a credit union membership. You aren’t just a customer; you take ownership in the credit union. Every member starts with a traditional savings account to begin the process. From there, you can set up additional accounts for whatever you need.
When you join Capital Credit Union, the best part about our membership is that it’s easy to join. Membership is granted to anyone who lives or works, owns a business, or attends school in one of the northeast Wisconsin counties we serve. You may also be eligible if you have an immediate family member who already belongs to Capital CU.
The online application is simple. You’ll just need a few things:
- A Social Security number
- A government-issued ID
- A funding source—a new account requires a $5 minimum, $1,100 maximum if you’re electronically transferring it from another financial institution, or $10,000 maximum if you fund it with a debit or credit card
You can also stop by and visit with a customer service agent at one of our local branches. You also have the option to set up an appointment before you come in.
Then, with a new traditional savings account open, you’re ready to go. Add to the balance regularly, and you’ll be better prepared for all that life throws your way.
Take Your Emergency Funds to the Next Level
In no time at all, you’ll be well on your way to being prepared for life’s little emergencies. You’ll enjoy the peace of mind that comes along with having emergency funding set aside. But as you grow and save, why not earn even more? The Capital CU money market account takes emergency savings to a whole different level. If you have $2,500 or more sitting in a savings account, it’s time to start earning more dividends while still having easy access to your money when you need it.
A money market account is just as easy to open as your traditional savings account. Start the process online with a simple application, transfer the amount you want to earn more on, and then sit back and watch your money grow.
Our money market account will never charge a monthly service fee. You’ll have full access to your balance and can withdraw without worry. Stop by a branch for your banking needs or utilize your account digitally. Your funds are federally insured by the NCUA up to $250,000 for each individual account holder.
Dividend rates vary based on the money market you open and the balance held in the account. With larger dollar amounts, this can add significantly to your bottom line.
Multiple Savings Accounts Can Build Financial Savviness
Are you considering starting an emergency fund but already have a traditional savings account? Wondering if you can have multiple accounts in one place? You can. Most people have many different financial goals. Multiple savings accounts help you see your progress as you reach each goal.
Start by clearly defining what you’re saving for. Whether it’s a house, a vacation, an emergency fund, or your child’s education. Clearly defined accounts will help you see each goal more clearly. It also gives you a chance to build momentum toward individual goals. Set your goal, transfer money monthly, and watch your account grow. It’s an easy way to stay excited about saving.
How many accounts should you have? It depends on your goals. If you’re new to savings, start small. Then build and get more sophisticated over time. Set up each account with a specific purpose—like an emergency fund. You’ll be less tempted to withdraw the money when you know it’s earmarked for a particular purpose.
Capital Credit Union is here to help you with each of your goals when you’re ready. Ready to get started today? Set up a traditional savings account and add to the balance regularly. You’ll be setting yourself up for financial success for many years to come.