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Emergency Fund Offers Peace of Mind

With September here, our lives tend to get back to “normal” as our children are back in school, co-workers are back from vacation and offices are operating more at full capacity.

Another routine that should be “normal” any time of the year is putting away a little money into an emergency fund every pay period. We’ve been told since we were young that we need to “save for a rainy day,” but that concept increasingly seems to have fallen on deaf ears. Recent surveys have shown that more than half of all Americans would have trouble coming up with $1,000 in the event of an emergency.

The general rule of thumb is to have between three and six months of living expenses saved in the emergency fund.

Remember that, no matter how well you plan, unforeseen incidents can happen. A car might break down, a water heater could give out and flood a room or garage, or a lengthy illness could cause some expensive medical bills. Having an emergency fund can make these events less traumatic.

The best solution is to start saving a set amount, even if it is small, with each paycheck. There are ways you can divert a regular sum of money before you see it and spend it.

If you have your pay checks directly deposited into your bank accounts, ask your bank to transfer a small sum, whatever you can afford, into a savings account.

You won’t get rich off the interest associated with a savings account, but with the money automatically placed there, it’s “out of sight” and “out of mind.” You typically won’t miss that $50 or $100 that’s been safely set aside.

If you truly can’t find a penny to spare, speak to your local banker or find a financial advisor who will offer helpful suggestions for re-organizing your finances. Rabobank has financial service representatives in each branch who might be able to help you set up a savings plan.

Remember, preparing for things now can help ease the pain when something does happen later.

Michael Drapeau is Rabobank, N.A. Financial Services Officer in Murrieta. Rabobank, N.A. has 119 retail branches in California, including Murrieta. www.RabobankAmerica.com