The Art of the Emergency Fund

Personal finance

Do you have an emergency fund? Are you ready to deal with emergencies?

Don’t lie! Most of us don’t. After paying bills and dealing with investments, who has any extra money to save? Who wants to save money for something that hasn’t happened yet?

Many personal finance bloggers preach the idea of an emergency fund. Today I wanted to get into more detail on this topic and how it works.

 What are the benefits of an emergency fund?

  • Deal with the unexpected.
  • Not have to use your credit card.
  • Bail yourself out.
  • Sleep at night know that you’ll be covered.
  • Plan for a rainy day.
  • Cover expenses if you ever get fired.

Now you know why you should have one. This usually isn’t enough to start a new savings account. Just to be transparent I wanted to share my emergency fund situation with you guys.

How do I run my emergency fund?

I leave money in my checking account. I also have a beefed up savings account.

I don’t have an elaborate “emergency fund.”

I just have extra money sitting around to deal with emergencies and whatever life may bring me. Things always happen. It’s not a matter of “if,” it’s a matter of “when.”

Have I ever used my emergency savings?

YES. Many times.

One specific story comes to mind…

I was driving home from school. It was late at night and it was pretty damn cold. I just wanted to get to the library to cram for my final exam the next morning. I was over-worked, under-motivated, and just feeling crappy. As I’m getting off the highway, my car slides and hits the curb at a fast speed.

I panicked. I was nervous. I drove to my buddies house. I knew that something was wrong. He’s a mechanic and he helped me check out the car. He told me it definitely needed work and that it couldn’t be avoided.

The next morning I went to the shop before my exam. I studied in the waiting area while they fixed my car. It sucked. I didn’t want to hand the money over, but I had to. Luckily I had money saved up to deal with this.

Now it’s your turn…

How can you set your emergency fund up?

Start saving. Save a dollar. Save two dollars. Save anything that you can. Put this money away. Hide it. Just keep on going.

I also suggest that you create a new account to keep this money in. I would label it”emergency” just so that you mentally separate this from your other accounts.

You don’t have to do anything special. Just keep some extra money on the side.

This isn’t the sexiest topic, but we all need to protect ourselves.

Are you ready to get your emergency savings off the ground?


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Carnival of Personal Finance #383 – Capitol City Fall Edition!

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