Chris O'Shea
Having a well-stocked emergency fund is important. But so is saving for retirement. So, how do you know which one to focus on? Well, we’ve got you covered. Here’s what you should know.
Emergency Fund is Important
An emergency savings fund is extremely important to help cover the unexpected things that happen in life. When deciding on saving for emergencies or retirement:
- Consider your personal goals.
- Follow the rule of thumb from many financial experts, which is to save enough to cover six months of household expenses.
- In reality, you probably want more than that stashed away, but six months is the bare minimum.
- However, just to cover yourself, you might want to start with your emergency fund first.
Retirement is Also Important
Saving for retirement is just as vital as an emergency fund. However, since it is typically years down the road, you have some wiggle room here.
- If you have an employer match for a 401(k), try to make that your first retirement savings goal. That’s free money being offered to you.
- If not, start small and make sure you’re saving something consistently each month for retirement.
- Once you have your emergency fund stocked, shift your focus to retirement and make it a priority.
Save for Both
Life isn’t cut and dry. It’s okay to move between two financial strategies as you try and do what’s best for you. Don’t be too hard on yourself. As long as you’re making an effort to save for emergencies and your golden years, that’s what matters most.
Do One Thing: Consider your financial goals when deciding between saving for emergencies and saving for retirement.
