BFG in the News: Victoria answers a reader’s question about allocating savings in an emergency fund

Victoria Cannillo, an Associate Financial Planner/Analyst at Baron Financial Group, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, originally published in February 2025:

“How much do I really need in an emergency fund?”

A 30-second read by Victoria Cannillo:  April is “Financial Literacy Month” and a good time to share our tips to help create an effective spending plan. Please let us know if you have any financial planning questions.

• Keep track of your spending: at the beginning of the month write down the balance of your checking account. Do this on the 1st of the month for 3 months. If you incorporate your income for that period as well as any cash withdrawals from other accounts, you can get a sense of what your monthly spending might be.
  
  
• Have a rainy-day fund or an emergency fund: this is money that is specifically put aside in a savings account for use when an unexpected expense occurs. The typical recommended amount would be 6 months of your fixed expenses. Consider your student loan and mortgage payments into this as well. One way to start this process would be to set up an automatic deposit into the emergency fund account each   time you get paid. It is best to have this go to a savings account, because if it’s in a checking account, you are more likely to spend it.
  
  
• You mentioned that you don’t have credit card debt, but as a friendly reminder - Use credit cards wisely: using your debit card or cash instead of your credit cards can limit how much you spend. If you are using credit cards, be aware how much you are paying in interest. We recommend paying your full statement balance every month to avoid paying any interest.
  
  
• Wait before buying on impulse: it is very easy to purchase items online today. An idea might be to add items to your cart and revisit them at a later time to avoid buying on impulse and spending more than you can afford. Another idea is to set aside a few days each month where you review items you would like to purchase. This can help keep you within the guidelines of your spending plan.
  
  
• Consider working with a Registered Investment Adviser: RIAs have a fiduciary duty to act in their clients’ best interests.  An advisor can help you develop a financial plan with your specific goals and needs in mind. Assuming you are farther away from retirement, you may consider an hourly fee-only advisor who can help you as needed.
  
  Read Karin Price Mueller’s article here.

View our video on “How do I create a budget/spending plan?"

If you have any further questions, please reach out to your Baron Team.

Disclosure:  This is a general communication being provided for informational purposes only. This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your financial planning and tax professional for personal advice