A few weeks ago, I received the preliminary bill from our vacation ER adventure.
I’m glad I was sitting down.
Because I. Was. Panicking.
Have you ever had this thought run through your head, “Why does it always feel like we’re so close to getting ahead — only to fall behind?”
Thankfully, the panicking was short lived. My husband reminded me that we have an emergency fund…and that’s why we have it — for emergencies!
Do you have an emergency fund?
If you don’t, you need one. There is no predicting when or why you’ll need it…but someday, you will use it. Here are a few tips to get started:
1) Start by building up $1000 in an easily-accessible account.
If you don’t have any type of account for emergencies, this is your first step. You need to do whatever it takes to get this initial amount available. Sell stuff, cut your cable, don’t eat out, just do whatever you can to get that amount quickly (legally, of course)!
Also, even if you’re paying down credit card debt, you still want to work towards this goal. You need to have the funds available — because you don’t want to add to your credit card debt in case of an emergency.
2) Contribute monthly to your emergency fund until you have three to six months worth of living expenses.
Please note that I said living expenses. I’m talking bare-bones living here….the amount you would need to make your fixed payments and provide for groceries. I’m not including entertainment, eating out, clothing, etc.
Once you’ve met that goal, you may still want to continue building up the fund so you have 6-12 months worth of living expenses. My personal opinion is that you should have all other debts (besides your mortgage) paid off before you do that.
3) Restock your emergency fund after a crisis.
If you’ve used your funds during a crisis, you’ll need to concentrate again on rebuilding the account. Start at Step 1 and begin again!
A few final thoughts:
- Make sure you only spend your emergency fund on a true emergency (finding a good sale on a new couch doesn’t qualify)! 😉
- Keep the money in an easily-accessible account — but not too easy! For instance, an online account or an account at a credit union will give you distance from your personal checking account — and hopefully make it seem a little more hands-off for regular expenses. If you have trouble leaving the money alone in there, consider keeping the checkbook or debit card with the most financially-responsible person in the household.
- Check your heart. It is wise to have an emergency fund, but are you trusting in it — thinking it will somehow insulate you from any problems instead of trusting in God? (This could easily be another post! For more on this topic, check out Would Jesus Have an Emergency Fund?)
What are your tips for building an emergency fund?!!