Do you have an emergency fund?
What is an emergency fund… and why have one?
The reasons why you should have an emergency fund is that its for emergencies.. When your car breaks down, when an appliance breaks and if you lose your job. It gives you the security to get through without you having to panic.
The point of having an emergency fund is purely to use in emergencies, it isn’t a generale spendable fund.
I have my emergency fund in my normal everyday account but I have reset my thinking to that amount being my zero balance.
That’s because if I need to I have to have access straight away to that money!
A lot of people think it’s a great effort to have to save up for an emergency fund. They struggle to find the motivation to save the money, worrying about the short term and how they’ll do it…maybe that’s you?
Well just think of the opposite, what happens when you don’t have an emergency fund and your car has broken down and that’s your only means of transport to and from work. Think of the relief you would have if you had an emergency fund, if you had funds there for that exact purpose so you didn’t need to worry.
Isn’t some short term pain and sacrifice to save an emergency fund, worth your long time gain?
My husband is English and we have made sure we have saved up enough on top of our everyday emergency fund for a flight to England should something happen to a family member, as you want to be there for your family in times of need.
So hopefully you have decided to take action to create an emergency fund…
Now you need to take the steps to save the money for it. I would suggest starting off small and build it up, try for $250, then $500, $750 and then to $1000.00
By setting your initial amount low, you aren’t going to panic that you have to save so much money. Its just like taking baby steps.
A lot of other budgeters say to have an emergency fund of $1000- my issue with this that this amount of money can go very quickly. What happens if you are unable to find work for 1 month, will $1000- cover you? I have slowly built mine up to cover me if I were to be without work for 2 to 3 months now. I’m not saying save for that straight away but that can be one of your longer term goals.
Here are my great ideas to get your emergency fund started…
- Conduct a spending freeze (stop all unessential spending for 7-30 days) Bells Budget has a spending freeze sign up here if you want to know more…but use the money from the spending freeze to start your emergency fund.
- Deduct an amount automatically from your pay (you may need to have a separate account while you do this) Start with $10 or $20 a pay.
- Sells some items that you aren’t using.
- Create a budget with a saving’s plan. Don’t know how to go about budgeting…learn more about the Bells Budget e-course
Once you have saved money for your first goal, celebrate the achievement by working on your next goal!