Do You Have An Emergency Fund

Life is full of surprises.  One day we are making ends meet with something left over and then a day comes when all of that can change.  With the unpredictability of day to day living, having an emergency fund saves worry over finances when you are already worried over other things.

What is an emergency fund?  Well, it is a certain amount of money that is set aside for situations that we cannot foresee.  It could be an illness in the family, an accident, car repairs, or a natural disaster.  Whatever it is, such tragedies can deplete a bank account and lead us into financial disaster.  

The thing about life is that unforeseen circumstances can happen to anyone and everyone.  No one is exempt from them.  The best we can do is to prepare in advance so that we are not focused on money.  An emergency fund is roughly equal to several months’ worth of income.  Ideally at least three months' worth of total household income is a good amount to have put away. 

That is a lot of money.  When you add up the income of everyone in the house who holds a job, we could be talking about $10,000 at least.  It is hard for most people to save a little, let alone that much money. 

Don’t let this stun you into doing nothing.  Starting anywhere is better than not starting at all.  If you can manage to save fifty dollars a pay check, then do it.  Sure, it will take a while to build up an appreciable fund, but you will still have money put aside in the event that something happens. 

The emergency fund is tapped when our regular finances can’t handle the strain of an incident.  Now this is not to be used because we are living above our means and overshooting our budget every month.  But, then again, if we are living beyond our means, we wouldn’t have any money to contribute to an emergency fund.

One way to build your emergency fund when money is low is to use bonuses, raises, and tax refunds.  Instead of buying extra goodies with that raise, take the extra money from the check and add it to what you are already putting away.  A tax refund will build up that emergency fund quickly. 

An emergency fund saves headache.  Costly car repairs can set you back several hundred dollars.  An emergency fund will keep you from having to choose between having your car back and having your lights on.  And when a loved one is ill, you can concentrate on them and not think about how you will pay the bills.

Start an emergency fund today.  Whatever you can contribute is good.  Encourage the entire family to help out.  While you are building a cushion for possible emergencies, you are also teaching them to save money.