Turn Your Child Tax Credit Advance into an Emergency Fund! (Article)
Turn Your Child Tax Credit Advance into an Emergency Fund!
An emergency fund is a vital tool in your financial tool belt. Without an emergency fund you may not be able to pay for… emergencies. Emergencies can be deductibles on insurance, car and home repairs or any other unexpected expense. The problem with not being able to pay for unexpected expenses is that many people resort to credit cards or payday loans. This can then lead to larger debt issues.
So how much do you need in your emergency fund? There is no magic number but a good rule of thumb is 3-6 months of living expenses. Having a dual income family or other streams of income such as rental properties can keep you closer to the 3-month number while having a single income stream or a family member with health issues might mean that 6 months makes sense.
As you start receiving a monthly child tax credit advance, consider contributing it directly to a separate savings account. You will be glad you did.
This is a great discussion to have with a financial advisor who can evaluate your living expenses and situation and make a recommendation on your specific situation.
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