If I can give
anyone any solid piece of financial advice it is to have an emergency fund. I
cannot express enough how important it is to have one of these. If nothing else the peace of mind that is
provided to me just knowing I have the funds set aside to cover almost any
emergency makes it entirely worthwhile.
The amount we
should save and set aside depends entirely on the individual. How large is your household? What type of a house do you own? What kind of cars do you drive? What are your typical monthly expenses like? What other resources do you have available?
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| Don't forget to adjust for inflation |
I personally
keep a $5,000 emergency fund at the ready.
When I was raising my family it was adequate to cover us. With the rising prices and inflation I have
left it at this amount even though it is now just me in my household right now. It may surprise you to know that since I
established this account I’ve never touched it.
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| Try to plan ahead for unexpected expenses |
Many things can
constitute an emergency, such as my recent need to replace my refrigerator and that is a perfect example of
where I might tap into this fund, but my goal is to never need to. Before I will use my emergency fund I will do
everything else I can think of to cover that expense before I head to my
emergency fund. Usually I can find a
way.
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| Don't panic! Before going for your emergency fund look at all options |
With the
refrigerator I was able to finance it on my PayPal credit account for 0%
interest for six months. I didn’t buy a
fancy or super expensive refrigerator and I knew that I could probably cover
the cost of this appliance using money from my part time job to make payments
and pay it off long before the six months is up and I accrue any interest. If, for some reason, I can’t do that then I
also have my savings to fall back on and pay it off. In the meantime my emergency fund remains
untouched and intact for what I consider a “true” emergency.
For me a true
emergency is any unplanned event and expense that I’m not able to cover on my
own by any other means. Then, once I
pull money from my emergency fund I will get myself busy, tighten my belt and
work hard until those funds have been replaced before I do anything else. It is that important to me and I take it very
seriously. My emergency fund provides me
with security and it keeps me safe. There
is no better feeling in the world than to feel safe and secure. Do you have an emergency fund?
I agree wholeheartedly. We've had an emergency fund as far back as I can remember. We've rarely (maybe a time or two) needed to use it, but having it there is essential to my own financial and emotional well-being.
ReplyDeleteThey really are essential, especially now where things just don't seem to last and hold up like they used to. Not to mention how expensive repairs have become.
DeleteI currently have $10,000 in mine. That would last me 3 months. My goal over the next few years is to raise it to 20,000. I took this whole entire off and used 9,000. It was the best summer ever. I agree having emergency fund is peace of mind.
ReplyDeleteGood for you! That is awesome.
DeleteWe don’t have anything called an emergency fund, but we do have a couple savings accounts. We keep a few thousand in a local bank, and then the bulk of our savings is in a HYSA. We never get into either unless Dh wants to buy something that others might finance, like his new toy hauler, or new 4 wheeler. Once money goes into savings it stays there.
ReplyDeleteDiane
Excellent Diane!
Deleteworking People should have several months of expenses saved. You never know if your job will vanish or you'll be ill etc
ReplyDeleteQuite true.
Delete