This post on starting an emergency fund is brought you you by Genworth Financial and Branfluential but all opinions expressed here are my own.
I’m sure you have all been watching a little bit of the news and have seen the current political upheaval that the United States government is going through. With our political parties unable to come to an agreement on the federal budget, there are now over 800 thousand federal employees out of work and without a paycheck. My husband is one of them. Along with many, MANY of our friends. There is no guarantee how long this financial chaos is going to go on and I find myself stressed out about how I am going to pay my mortgage if it goes on too long. While we have an emergency fund saved up, I am not sure how far it is going to go if this situation drags on. I have not paid quite enough attention to my emergency fund over the years, assuming that our finances were relatively stable. I should have known that nothing involving the federal government is stable. I needed a few reminders on how to prepare an emergency fund so when our paychecks finally start rolling in (fingers crossed SOON!) we can start saving again. It is smart for ALL people to set up an emergency fund because you honestly never know when a job will end or someone will get sick or the federal government will go on strike!
Have You Started an Emergency Fund?
Step one of preparing your emergency fund is to contemplate your expenses. Start a budget and look at your day to day living expenses. Then, find the absolute MUSTS…mortgage, bills, gasoline. I am currently spending almost $200 a month on my kids orthodontist. That REALLY stinks but is not negotiable. Add up how much you absolutely have to save in order to not default on bills or go into debt. Once you have those numbers set, you need to do a little more math..sorry! You should make your emergency fund large enough to cover 3 months of your expenses. Look at how much you make and how much you can manage to put into savings to build up your emergency fund. Then, start putting that money aside every single month. Not just SOME months…EVERY month! Whether you feel like taking a trip to Disney or buying that new pair of shoes. EVERY month!
In order to make sure you don’t touch that money, you need to open up a separate bank account just for that emergency fund. One that does not have a checking account or debit card associated it with. Resist all temptation when it comes to spending that money. A few cute pairs of shoes is SO not worth getting your electric bill turned off because you can’t pay it. Make deposits into your emergency fund automatic. If the money comes out of your check before you even get it, you won’t miss it.
You may tell yourself that your job is secure and you have no need of an emergency fund. Do you ever wonder what would happen if your spouse (and major bread winner) was in an accident and could not work? What if a severe illness struck either you or your partner and you were hospitalized for a few months? Maybe one of you is sick and the other is needed as a full-time care giver. Along with your emergency fund you need to take a look into the type of insurance you currently have. There are several insurance plans that may help you stay out of debt during a short-term loss of work. Short term disability is one option you may want to look into. When you are done setting up your bank account for your emergency fund, start looking into what insurance options are available.
If you want to find a few ways to cut expenses so you have money for your emergency fun, check out my recent article on how to save money. You may find it easier to give up your daily latte or to say no to that new pair of shoes if you have a goal in mind. Your goal should be the financial security of your family in times of emergency. Once that is taken care of you can start eying that new pair of shoes again!
This post on starting an emergency fund is brought you by Genworth Financial and Brandfluential but all opinions expressed here are my own.
Diane is a professional blogger and nationally certified pharmacy technician at Good Pill Pharmacy. She earned her BS in Microbiology at the University of New Hampshire and has worked in cancer research, academics, and biotechnology. Concern over the growing incidence of human disease and the birth of her children led her to begin living a more natural life. She quickly realized that the information she was learning along the way could be beneficial to many others and started blogging and freelance writing to share this knowledge with others. Learn more about her HERE.