Investment Tip

Handling Financial Emergencies

Everyone, at some point in their life, will experience crises of one sort or another that put stress on their otherwise tranquil existence. Cars break down, a death in the extended family may require unplanned travel, the house needs a new water heater, a sudden health problem or accident keeps you from working. Sometimes people lose their job and finding a new one takes a while-usually longer than expected.

These or any similar events can create havoc with a person's budget and finances, unless one plans and prepares for emergencies. So, here's a plan for you.

• General wisdom says that one should set aside three months worth of income for meeting emergencies.
• Six months of income is better.
• Emergency funds should be kept readily available in a passbook savings account, an accessible certificate of deposit, or a money market fund; or some combination of all these.
• Replenish emergency funds as soon as possible if/when you've had to use some.
• DO NOT tap into your emergency funds to buy consumer products. A new set of golf clubs or a new outfit do not qualify as emergencies.