Having an Emergency Fund in College
You’ve probably heard the expression, “Save for a rainy day.”
But what if it’s more than just a little bit of rain? What if there’s a financial emergency while you’re in college?
The unexpected happens all the time. And since you may not know when and what will happen, being ready for it can make the difference between staying in school and being faced with additional stress and altered plans.
Having an emergency fund can provide security when unexpected costs come up.
Creating an emergency fund
An emergency fund is a stash of money that you save specifically for unplanned expenses or financial emergencies.
While you can save your actual cash, it’s safer to put your emergency fund money into a savings account at a bank.
As an added bonus to saving at a bank, you can usually earn a small amount of interest on your money over time.
How much you set aside can be worked out with a financial coach (if your school provides that resource) or, perhaps a trusted friend or parent.
Now, you may be thinking “I’m supposed to just put money away and not use it?” Yep, pretty much.
You’ll be thankful when the unexpected inevitably happens and you have the money to shield yourself from consequences such as falling behind on rent or other payments.
Need some help getting started your emergency fund? Check out this essential guide to building an emergency fund from the Consumer Financial Protection Bureau.
When to use your emergency fund
You should really only use your emergency fund in times of, well, emergencies.
That means unexpected expenses, such as:
- Car repairs.
- Tuition or fees you didn’t account for.
- Emergency medical procedures.
- Family emergencies.
- Replacing broken or stolen technology like your phone or laptop.
- Any unexpected event that causes you to have to travel.
- Natural disasters.
- Home repairs.
These are all good examples of when it’s okay to dive into your emergency fund.
You can’t know the future, but you can give yourself a chance at weathering whatever storm comes your way.
Even saving a small amount of your monthly income can help you start your emergency fund. You can always increase your amount later on.
When you have an emergency fund, you’ll be better set to handle unexpected expenses.