Breathe Easier with an Emergency Fund

I’ve talked with numerous people who don’t have an emergency fund. All of these people have one thing in common: they are stressed when they talk about finances and often overdraw on their bank accounts.

If you’re one of these people, you’re surely not alone. Building an emergency fund can seem like a tedious task when your margins are thinner than a toothpick. Find some ways to improve your income and lower your expenses. Once you’ve accomplished these tasks, it’s time to start destroying your debt besides your (possible) mortgage. Finally, you need to save for your emergency fund.

Think of your emergency fund as a wall protecting you from the storms of life. These storms will come, and you need to be PROACTIVE in counteracting these misfortunes.

Over the past year, the following storms hit us full force:

• Our electrical box for our washer/dryer broke. I repaired it for about $81.
• Our dryer stopped drying. We replaced it for about $800 (special unit for our small space).
• Our washer door and sensor broke. We replaced the washer for about $800 (special unit for our small space).
• iPhone broke. Replaced with lower-end model for $105 (truly an emergency, we need iPhones for work).
• Porch support beam rotted. Replaced for about $550.
• A few car repairs for a total of about $1000.
• Cat ate clothing! Replaced for $300 (expensive cat!).

I’m sure there are many more emergencies I’m missing. Our emergency fund expenditures totaled about $3434.oo for the past year. That’s a lot of money for us. If we hadn’t been spending our income we earn this month next month and built up an emergency fund to handle these events, we would have been in trouble.

Here’s an idea: If your bank lets you create an online account that you can label “Emergency Fund,” you should do it! This will separate everything out so you won’t be tempted to spend funds that are intended for emergencies.

How big should your emergency fund be? 3-6 months of expenses is a great plan. Keep it straightforward and strive toward your goal! Soon, you’ll be breathing easier and weathering the storms better than ever!