Unexpected expenses always seem to come up! When an emergency hits it can be incredibly stressful to find the cash you need to get that new tire, cover the copay at the doctor, or pay that unexpectedly high heating bill. We’ve talked to moms who are scrambling to get a payday loan or borrow the cash when those emergencies arise, and they often feel stuck. They feel forced to take whatever funds they can get, regardless of how high the additional fees are. No one should have to feel that way. That’s why it’s so important to make sure you have a plan before the emergency hits.
1. Create an emergency savings fund.
The rule-of-thumb is to save enough to cover at least 3 months of expenses. That way if you were to lose your job you have enough funds to support you while you search for a new one.
Pros: This can be a good option for people who are able to automate saving a piece of their paychecks or who already have a system for saving. To get the most out of your money it’s great to open a high-yield savings account where you can deposit these funds and have them grow, while knowing that they are FDIC-insured and secure.
Cautions: Building up your savings balance in an emergency fund can take many months and sometimes years. For many people it feels like this option is a good longer-term solution, but still leaves them uncovered if an emergency were to hit in the short-term. Many people also prefer to leave their savings as a last layer of protection that they leave untouched.
2. Open a credit card so you can use your limit as your cushion.
If you are able to get approved for a credit card and can find one with a 0% or low interest rate, this could be a good emergency cushion option. The plan here would be to leave this card untouched, and then to use it when an emergency hits.
Pros: Having the credit card can offer you immediate coverage when needed. If you can find a card with no or low interest this can also be much cheaper than the interest and fees you’d find with a payday loan.
Cautions: Here it is really important that you are able to pay back your balances in full each month to avoid any interest, or to pay most off to minimize the interest. If you can’t pay back your balances in full each month, the amount you owe can grow as it accumulates interest, and it can quickly spiral and make it hard to ultimately pay off the debt. It can get out of control, and hurt your credit.
3. Cover your family with an Emergency Cushion Plan.
An Emergency Cushion Plan gives you the same layer of protection as a credit card, without the risk of spiraling out of control or accumulating interest. Built for responsible moms, Our coverage helps them navigate the unexpected moments with their little ones.
Pros: You can request up to $500 at any time within the 6-month coverage period (interest and late-fee free), and repay in weekly or bi-weekly installments over 2 or 3 months. You can request funds again after you pay back your balance. There are no credit checks to apply for coverage.
Cautions: You need to be able to pay $60 up-front for the coverage, and pass some clear eligibility criteria like being a parent of kids under 18, and living in states other than CA, IL, MD, and CT. Your eligibility is determined based on your three most recent bank statements where you must demonstrate that you earn more than $1,500 per month that is directly deposited in your bank account, have neutral or positive cash flow over the past 3 months, and avoid returned items, stop payments, and too many cash advances. Review the eligibility criteria here, and apply if you are interested.
Whatever option you choose, you’ll feel good knowing you have peace-of-mind that you have access to an emergency cushion!
