Sentry Page Protection
Build an Emergency Fund Safety Net
We all know about saving for a rainy day, and it is in my top three most important financial habits, but in today’s economy it seems like every day is a rainy day.
Creating an emergency fund can dry up those rainy days and give us peace of mind for the future. Don’t walk around without your financial cushion.
What is an emergency fund? It is a sum of money that is set aside for the “what ifs” in life. Any one of us can have a misfortune befall us. Natural disasters put people in financial binds all the time. Accidents, job loss, death, divorce, and other situations can set us back quickly. Unless you are independently wealthy, when disaster strikes, your finances will take a hit.
You can be prepared for the worst with an emergency fund, and then the disaster will be but a blip in your financial plan. It does require sacrifice on your part to set up the fund. No one just has money lying around to put in a savings account so you have to create the opportunities. But once it's in place, the peace of mind is priceless.
The basis of the fund is to have at least three to six months of income set aside for those rainy days (and these days I am suggesting building an emergency fund to twelve months of all living expenses). If you and a spouse work then both incomes are included. But, for some, that is a large dollar amount so let’s start with something a bit easier.
It can take a while to save that much money. Set smaller goals so that the larger one doesn’t seem so unreachable. Begin with saving a certain dollar amount from each pay.
For convenience, modify your pay direct deposit so that amount automatically transfers to your emergency fund account. This keeps the money out of your hands where it may or may not make it to its predetermined destination. We all get a little weak in the knees when it comes to money.
Then get into the habit of emptying your pockets every night. This is more of a man thing to carry change in their pockets, so if you're female, empty your purse. Place those coins in a Mason jar or a piggy bank or an empty vase or even a recycled peanut butter jar. At the end of each month or once the container is filled, go to your bank and put it through the cash counter. Then deposit that money to your emergency fund. This is something everyone, even kids, can do to help out with the financial cushion.
Keep everyone accountable. Remind them of the peace of mind that comes with knowing you can handle financial emergencies when everyone pitches in to save money.
The hardest thing will be not disturbing the emergency fund. The sacrifices that you make will be in the form of incidentals that you don’t need to have. Examples of these things include going to the movies, going out to dinner, buying new clothes or shoes unnecessarily and yes, even ditching the morning latte and the smashed avo on toast, and more.
But it also encourages us to find new ways to enjoy family time. Spending less time on the go will allow you to find activities your family can do together at home or that cost little or no money out and about.
What about your emergency fund? Have you started it? If not, throw a few coins in a jar and begin today.
Creating an emergency fund can dry up those rainy days and give us peace of mind for the future. Don’t walk around without your financial cushion.
What is an emergency fund? It is a sum of money that is set aside for the “what ifs” in life. Any one of us can have a misfortune befall us. Natural disasters put people in financial binds all the time. Accidents, job loss, death, divorce, and other situations can set us back quickly. Unless you are independently wealthy, when disaster strikes, your finances will take a hit.
You can be prepared for the worst with an emergency fund, and then the disaster will be but a blip in your financial plan. It does require sacrifice on your part to set up the fund. No one just has money lying around to put in a savings account so you have to create the opportunities. But once it's in place, the peace of mind is priceless.
The basis of the fund is to have at least three to six months of income set aside for those rainy days (and these days I am suggesting building an emergency fund to twelve months of all living expenses). If you and a spouse work then both incomes are included. But, for some, that is a large dollar amount so let’s start with something a bit easier.
It can take a while to save that much money. Set smaller goals so that the larger one doesn’t seem so unreachable. Begin with saving a certain dollar amount from each pay.
For convenience, modify your pay direct deposit so that amount automatically transfers to your emergency fund account. This keeps the money out of your hands where it may or may not make it to its predetermined destination. We all get a little weak in the knees when it comes to money.
Then get into the habit of emptying your pockets every night. This is more of a man thing to carry change in their pockets, so if you're female, empty your purse. Place those coins in a Mason jar or a piggy bank or an empty vase or even a recycled peanut butter jar. At the end of each month or once the container is filled, go to your bank and put it through the cash counter. Then deposit that money to your emergency fund. This is something everyone, even kids, can do to help out with the financial cushion.
Keep everyone accountable. Remind them of the peace of mind that comes with knowing you can handle financial emergencies when everyone pitches in to save money.
The hardest thing will be not disturbing the emergency fund. The sacrifices that you make will be in the form of incidentals that you don’t need to have. Examples of these things include going to the movies, going out to dinner, buying new clothes or shoes unnecessarily and yes, even ditching the morning latte and the smashed avo on toast, and more.
But it also encourages us to find new ways to enjoy family time. Spending less time on the go will allow you to find activities your family can do together at home or that cost little or no money out and about.
What about your emergency fund? Have you started it? If not, throw a few coins in a jar and begin today.