A Better Way to Manage Your Everyday Money - Book - Page 107
You can create short-term savings for any purpose. Here are three types of short-term savings
that are easily set up in PerNetFlow. One will prepare you for unexpected expenses. The other
two will help avoid unpleasant dips in your net cashflow.
Emergency fund
An emergency fund is a short-term savings that you set aside to pay for unexpected expenses
such as:
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Unforeseen medical bills
Home appliance repair or replacement
Plumbing issues
Car repairs
You create an automatic emergency
fund in PerNetFlow with the savings
set aside limit option. When the
balance in the emergency fund ledger
reaches the limit, the set asides are
automatically stopped. When the ledger
balance falls below the limit, set-asides
are resumed until the limit is again
reached.
The amount of your emergency fund
depends on your comfort level, which
may change as you gain experience managing your household finances. When starting out, $500
may be enough. As soon as you can, you can begin increasing your emergency fund to maybe
$1,000.
As your income grows and your lifestyle improves, continue increasing your emergency fund.
Having money on hand for emergencies that is equivalent to three to six months of your
expenses is a goal that will keep your emergency fund in sync with your income.
Resist the temptation to use the money in your emergency fund for non-emergency purposes.
While having your emergency fund immediately available in your PerNetFlow checking account
is optimal, moving the money to another checking or savings account is a way to avoid
spontaneous, unadvised use of your financial safety net.
Putting your emergency fund in an investment account is not recommended unless the account
allows immediate, on-demand withdrawals.
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