Everybody Can Have an Emergency Fund!

Everybody Can Have an Emergency FundI’m sure you’ve heard it a million times before, “you need an emergency fund.” If everybody is saying it, then maybe they’re on to something. Personally, I’ve never met anybody who hasn’t at one time or another had a financial emergency.

Unfortunately, most of those people didn’t have an emergency fund. That made them incur bills that they couldn’t afford to pay, go into debt with their credit cards and some even lost their homes, cars or taken money out of their retirement accounts (which by the way is a very bad idea if it can be avoided). Bad stuff always seems to happen at the worst time.

Things happen in life; quite often, those things require money to overcome. If you have the money to take care of these things, then you’ll have a lower risk of going into debt and losing your possessions.

If you don’t have the money, then more than likely, you’re going to have a hard time. Financial emergencies aren’t the only thing that emergency funds are good for; sometimes opportunities (which require money) arise. Being able to take advantage of more opportunities is another added bonus in addition to having financial security.

I never even had a designated “emergency fund” until last year, we had savings, but it was marked for other things. I have to tell you, it feels great! We might not have what others would consider a good amount in our emergency fund, but it’s a great place to start. In 2011, we were able to build up an emergency fund of $1,000; in 2012, one of our goals is to build that up to $2,000.

Once we got into the habit of putting money into our emergency fund, it sort of became a habit…and got easier over time. One of the things that helped me was setting up small transfers. Getting started always seems to be the hardest step to take, but once you take it, you gain momentum.

How much do you need in an Emergency Fund?

I’ve seen people recommend anywhere from $500 to 3-6 months of living expenses to up to 2 years living expenses. Honestly, I don’t think there is a magic number, because everybody’s income and financial situation is so different.

Really, if you can afford to have X month’s worth of living expenses saved in your emergency fund, then by all means go for it. If you can’t, then you’ll need to start smaller and work your way up over time.

If you don’t have an emergency fund at all, then why not start with a goal of $100? Sure it’s not going to be too helpful should a big financial emergency arise, but at least you’ll have something.

Then maybe, you could shoot for $500, and then keep going until you have your emergency fund to a number that you feel comfortable with. There’s nothing wrong with taking baby steps to reach your financial goals, you have to start somewhere.

 

Do you have an emergency fund?

About Jen Perkins

Likes: saving money, being debt free (aside from our house), zombies, travel, getting money, blogging and dogs. Dislikes: debt, being broke, bunnies, wasting money, not having enough money to travel the world and paying interest. Facebook  ♥  Twitter  ♥  Google+  ♥  RSS

Comments

Everybody Can Have an Emergency Fund! — 22 Comments

    • That’s awesome, Michelle. It sounds like $15,000 is something that you two can achieve without too much difficulty. Also, $15,000 is an amazing amount to have in an emergency fund and could protect you guys from many things. Good luck on getting it up there. :-)

  1. Yeah, we’ve got an emergency fund… but due to my employer perks it’s sort of a mess. I have a HSA so I save medical expenses separate from Housing/Vehicular… so I haven’t really figured out what’s a good multiple (months-wise) to target, haha. Hopefully it works its way into something usable, eventually…

    • At least you have something, many people don’t. I’m hoping to get ours to a nice comfy number over the next few years—hopefully nothing will happen to set us back. Good luck on boosting yours. :-)

  2. Luckily, I have a sizable emergency fund and never have to sacrifice to build it up (unless I ever have to use it one day). Now that I have it I am even more hesitant to use it though, so I almost want to have an emergency fund for my emergency fund.

    • That’s cool that you’ve got yourself a ‘sizable’ emergency fund. :-) I know what you’re saying, I’ll do almost anything I can to avoid taking money out of mine. There would have to be a REAL emergency for me to tap into it—which I love.

  3. We do have an EF, but it was down to $2K, so this month I’ve drastically cut our budget to add $1K to it by the end of the month! I’ve added $570 so far…. wish me luck!

  4. I have a small emergency fund. The problem is it wants to be all things to all people. I’m “saving” for an emergency fund (min. $1000), a DSLR camera ($700), planned travel in 2012 ($2100). I should have more savings in the emergency fund, but I am also paying off debt. It’s a lot of things at once. But hopefully I’ll start getting more serious and start snowflake saving too.

    • I don’t think there’s anything wrong with saving for various things at once, it’s much better than going into debt to get them. It’s great that you’re paying off debt and able to save some money at the same time, that’s always something I recommend. Good luck! :-)

    • Our emergency funds match. :-) One day I hope to have 6 month’s expenses too, then a year. It’s gonna take me a while to get there. Good luck with paying of your debt.

  5. We are working on rebuilding ours after a horror year. We have a small amount stashed away and are now focusing on clearing our debt, then will continue to build our savings. I am so glad we had some money to fall back on last year or we would have lost everything.

    • I’m glad you guys had an emergency fund when all that stuff happened. It’s great to have because we never know when stuff will happen. Good luck with getting rid of your debt and building up your emergency fund again. :-)

  6. I agree; starting a little bit is better than not starting at all. We have been able to build up a good sum only through years of diligence and persistence, and it started with small amounts here and there. ;)

  7. Definitely a good idea to have an emergency fund. Especially in this day and age of economic downturn. You never know when you could be the one to lose your job. If you don’t have a savings of at least 3-6 months of money to cover your expenses, you’ll be in big trouble. If you can, put away 3 months equal to your current 3 month income. If your out of a job, you’ll have a 3 month buffer period to find one, and you won’t be freaking out.

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