Don’t Get Pinched! Have an Emergency Fund

We know you know what it’s like to get pinched… like that one-time mamá would pinch you misbehaving? Ouch! But do you know what it’s like to get pinched by life?! We do and want to spare you from it.

All of us at some point or another have found ourselves in a pinch financially. Especially during those times when rent is due, student loans pile up, and suddenly the carcachita makes weird noises.  

¡AY! Just thinking about it made us flinch. So in the spirit of St. Patrick’s Day, here’s the Latino way of keeping people away from those pinching fingers to alleviate the pain of unexpected expenses. It’s called an Emergency fund!

An emergency fund is a stash of money set aside specifically to cover unexpected expenses. Expenses such as medical bills, car repairs, or sudden job loss. Situations like these happen ALL the time and what better way to not find yourself in a pinch than by preparing before it happens.

Having an emergency fund is as important as learning how to make guacamole. It can be a way to prevent going into debt or having to rely on credit cards to cover those expenses. Plus, aside from your abue’s prayers, having an emergency fund also provides peace of mind. 

Let’s go through steps you can take right now to build your emergency fund, AND you don’t have to wear green because from what we hear you’ll soon be covered by it:

1. Set a savings goal: Put pen to paper and determine how much money you want to save in your emergency fund. A good rule of thumb is to save at least three to six months’ worth of living expenses. Do not let this overwhelm you, remember that ANY money you put aside is better than nothing and you can start with small weekly contributions to reach your goal faster. ¡SI SE PUEDE!

2. Create a budget: We know we sound like a broken record at this point, but this is VITAL! To save money, you need to know where your money is going. For some tacos? Or staying at home with home-cooked meals? All this will be clear when you create a budget. Make sure to track your income and expenses as well as identify areas where you can cut back on spending. Use the SUMA App and we’ll help you set your budget rapidly. 

3. Automate your savings: Seriously, set it and forget it. Set up automatic transfers from your checking account to a separate savings account dedicated to your emergency fund. This can help you make steady progress toward your savings goal without having to think about it.

4. Use your tax refund to get started: The temptation to spend your tax refund on something you’ve been eyeing is easy, but don’t do it! Instead, consider using a portion of it to add to your emergency fund. Get started as soon as possible so your pot of gold can be even sweeter when you need it! 

5. Keep the money accessible AND growing: Because an emergency fund can save you if you’re in a pinch, it’s important to keep your emergency fund in a separate account that is easily accessible. We suggest a high-yield savings account because your money can earn interest with the passage of time! Do avoid investing your money in stocks or other assets because not only can they fluctuate in value. They also take some time before you can access your money. 

Was that easy or what? Whoever said there wasn’t a pot of gold at the end of the rainbow was wrong, because now you have a financial safety net in place. Hooray!

If you need help setting up your budget remember that SUMA has FREE tools and resources to get you started.