Friday Financial: Tips for Creating an Emergency Fund!

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Follow these Tips for Creating an Emergency Fund.  It could be a Financial lifesaver!
(originally published, OCTOBER 26, 2012, updated 2/2015) I wanted to start our fourth installment of Fourth Friday Financial by wishing my beautiful bride of 15 years a Happy Birthday!  What a blessing it is to share life with you! (comment from Mary- *sniff*, awww, so sweet!)

Last month we talked in greater detail on how to create a spending plan, aka a budget.  There is one category in your spending plan called “emergency fund” that I thought would be good to discuss today.  Your emergency fund is for unexpected events.  And just to be clear eating out for dinner or buying a big screen TV does NOT qualify as an emergency! 😉

Recently, I gained a whole new appreciation for having this category funded.   About two weeks ago, I went down in our basement and noticed there was some water on the floor.  I then had that terrible feeling in my stomach.  Yup – the hot water tank was leaking!  Ugh!  We all have these disruptions in our life and frankly we never know when they are going to occur.  And when they do; it never is at a good time.  Whether it is a hole in the roof, major car repair, or medical procedure – it is not a matter of IF, but WHEN you need to tap into the emergency fund.

So you are probably wondering how much should I have in my emergency fund? Dave Ramsey has some great guidelines on how much to squirrel away.  Here are some highlights- TIPS FOR CREATING AN EMERGENCY FUND:

Follow these Tips for Creating an Emergency Fund.  It could be a Financial lifesaver!

How Much to Save

  • Your first goal should be to make sure you have at least $1,000 saved or $500 if your income is less than $20,000.. Ultimately, you should work to have 3-6 months of your monthly expenses saved. Think of it this way, if you happen to lose your job- you will have 3-6 months of “cushion” saved up to live on until you go back to work.

How to Determine Expenses

  • Fortunately, you are all diligently working your budget (nudge, nudge) so as you fine tune your plans you should be able to have a good idea of what are your minimum monthly expenses.

How to Find the Funds

  •  You might need to get creative with how to come up with the funds.  This is when you may need to take a “money walk” around your house and see what items you can sell,  get more serious about using coupons or maybe even cut the cable (at least for a while).

I can tell you, I did not expect my hot water tank to leak but fortunately we had planned for it.  So while it was a total bummer,  the sting was not as bad because our emergency fund was fully funded.   Check out Proverbs 21:20 as it speaks to planning for those seasons of life that will be more difficult.

I would be interested in who has the most interesting use of their emergency fund.  Send us a note and share your story with us.

Fourth Friday Financial (FFF) is written by Mary’s Dear Hubby Andy, because he was “voluntold”. 😉 We have been together for 2 decades and you will begin to see that our differences compliment each other well.  Through this monthly series we hope you find practical information for taking control of your finances.

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Comments

    • says

      I’m so sorry the hear that Sheila, but thankfully you had the EF to begin with! I know many who have had similar problems and no EF to fall back on. You did a great job with your EF the first time around, I am sure you can do it again. Thanks for sharing!

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