I read an article a while back on CNN Money which stated that about 64% or Americans couldn’t come up with $1,000 if it was an emergency. I was so blown away by this that I had to see what you all thought about it.
I know there was a time in my life when I couldn’t have come up with $50 for an emergency, but I had some extenuating circumstances that came into play with that. I am at a place now that I could cover that and more, but I worked hard, sometimes 3 jobs at the same time to be able to not worry about emergencies being covered. I also know that something devastating could happen tomorrow with my finances and it could take it all away.
So, the big question now is…are you one of the 64% who couldn’t pay for an emergency if it happened? If you are, you’ll definitely want to read this article as well as make some changes in your life so you don’t have to worry about emergencies creeping up on you – because that IS what they do!
How Much Should You Have in Your Emergency Fund?
You should have enough to cover whatever your household expenses are for at least 3 months but it’s better to save up 6 months. Things that happen can be big or small and you need to make sure you are ready for either one.
Say you get up one morning and your refrigerator has died overnight. Not only do you have to buy a refrigerator to replace the one that blew, but you’ll have to replace the food that was in the refrigerator.
If you decide to get a new one, then you’re probably looking at around $1,000 if not more, and possible $100 in ruined food. Could you pay for that if it happened? If not, you might want to think about starting to put money aside because that’s only about $1,100 you’d need.
However, what if your central heat and air went out? Could you afford to get a new unit? With that you are looking at about $3,000 – $6,000. That’s a whole lot more than that refrigerator but can you do without air in the summer or heat in the winter? Most of us can’t and aren’t going to. So, you’ll put it on a credit card, get a loan or finance it through the company you are buying it from, right? None of those are good ideas.
Have You Started Saving?
If you’ve already started saving and have money in your emergency fund then good for you! However, figure out what emergencies could come up for you and decide if you have enough money in your fund to cover the expenses.
If you decide you don’t then you might want to direct a little more of your savings into the fund so that you can cover whatever emergencies come your way. This could be extremely helpful if a job loss were to occur. That could devastate a family trying to make it.
A Little Money is Better Than No Money
Even if you only have a little bit of money in your emergency fund you are doing better than most people these days. You might only have $500 in your fund, but if something happens and you need new tires for your car, you’ll have $500 to put toward that purchase that you don’t have to finance some other way.
No matter how much you can afford to put away into your fund, just put it in there because having some kind of cushion is better than not having anything at all to fall back on – and that can be scary.
Start small and work toward a goal so that you can cover those unexpected expenses that will come up every now and then. You’ll feel better if you know the back-up funds are there if you need them. You owe it to yourself and to your family.
Reply to this post and let me know how you are doing in creating your emergency fund! I’d love to hear how you’re doing it!