Be proactive with your money instead of reactive. In addition to having emergency savings in the bank, cover yourself by having insurance, being vigilant for identity theft, and checking your credit report.
Be Prepared for a Rainy Day
An emergency fund in a savings account is your “insurance” against using credit or debt in the event of a short-term emergency. This fund is for emergencies such as unforeseen car repair, replacing lost or stolen items not covered by insurance, or having to take an emergency trip home. In college, aim to have at least $500 in a savings account or money market account at the bank. After college consider upping the amount you have in liquid savings to cover at least three to six months of cost of living expenses. This money is not invested, and not kept in accounts that have a penalty if you take the money out early, as is the case with CDs or retirement accounts. This is your “rainy day” fund, your safety net. If you don’t have an emergency fund of at least $500, start one today.
What is Insurance?
Insurance is an agreement in which a person makes regular payments to a company and the company promises to pay money if the person is injured or dies, or to pay money equal to the value of something (such as a house or car) if it is damaged, lost, or stolen.
As a student, the types of insurance you will probably be most concerned with are health (for medical expenses), renters’ (to replace stolen goods), automobile (to cover your car if you have one), and identity theft (to help settle cases of identity fraud). To learn more about insurance types, talk to a coach.
According to the 2015 Javelin Strategy & Research Identity Fraud Report, college students are most severely impacted. Javelin Strategy & Research recommends the following six strategies to protect yourself from fraud:
- Secure your mobile device by updating regularly and locking with a passcode or fingerprint technology.
- Exercise good password habits by using strong, unique, regularly updated passwords.
- For your debit and credit cards, take advantage of EMV chip technology. And, make use of mobile payment.
- Sign up for account alerts with your banking, credit, and brokerage institutions.
- After a data breach, be aware that you may receive dubious solicitations for monitoring services. If it sounds like the service you’re being offered isn’t reputable or related to the original breach, contact the provider to see if an alternative service is available.
- Seek help as soon as fraud is detected. Be vigilant and report to the FTC.
As always, access your free credit reports using Annual Credit Report to scan for suspicious activity.
Investopedia – Savings vs Money Market accounts
Practical Money Skills – Emergency fund calculator