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I am glad you asked this question. Many people don’t even think of having a saving account, more or less this fund, in their budget, and it can be pretty significant. How I Create A Budget?
Hopefully, this post will help you with this topic. Now, let me tell you, I am not a financial expert in any way, shape, or form. However, I had raised two kids as a single parent before I met my wonderful husband. I have learned over many years, given I am up in my age, so I have many years of life experience that I will share with you.
An Emergency Fund, Rainy Day Fund, or what I call an Oh S**t Fund (I am sure you get it). According to the experts, Rainy Day Fund is a less spending fund account, but let’s face it, it’s hard enough to save for a savings account, much less several funding accounts. I mean, seriously, what’s the difference if I have ten accounts containing a thousand dollars in each or one that has ten thousand in one account?
Oh, nothing!
That is just more you have to keep up with. I can barely keep up with the accounts I have. One blog I read wanted a fund for each category. Who are you? Where are you getting all the money to supply these accounts? If you are a financial guru, you probably have it all figured out. Now, for us more laid back kinda folks, you know, the country, every day, mountain folks who work paycheck to paycheck trying to survive, this is for you.
So, I made it simple and put it all under one account that why I call it the Oh S**t Fund. This simply means life happens. I am talking about the unexpected stuff that never seems to fail. When you least expect something to go wrong.
Experts recommend you have at least three to six months of your monthly expense on hand. Yes, the whole monthly expenses, you don’t have a job have to pay everything kind. I personally recommend more, if possible.
How are you supposed to do that, you ask?
Check out – How Do I Save for An Emergency Fund?
Now, back to the reason you are here to learn about an Emergency Fund?
Many categories fall under this fund. However, they are all just as important. None are more important than the other. Don’t get cocky. Think it won’t happen because it will. Ok, for your younger generation, start now; it will be easier for you to have a family that will demand more money. Making it harder to save for your Emergency Fund.
No job stability – You might work in a high-risk industry, where layoffs occur frequently. You might want to save more. If you know you only work six months out of the year, well, you need to save for the six months you don’t.
Self-employed – Having a large emergency fund can help you get through the low times when your income fluctuates throughout the year.
Retirement – Having adequate savings is always a benefit because much of your income can come from investment accounts that could dive.
Medical – Dealing with medical issues such as surgery or an ongoing medical condition that the insurance might not cover, or just the co-pay alone can add up.
Veterinary – Your dog got hit by a car, ate a box of chocolate. The cat fell out of a tree broke its leg. The horse got too close to the bobwire fence pet. The cow got struck by lightning and amazingly lived. You get the idea.
Family Emergency – Death of a loved one. A child gets sick, you have to take off work. Unexpected pregnancy.
Travel – Your best friend calls you a Maid of Honor/Brides Maid/Best Man. The wedding is in Cancun or Hawaii. Oh, and you have to pay your own way. Another example is you just got the job offer of a lifetime, but you have to move to another state. Having to get another vehicle due to an accident or something else.
Weather – You know, stockpiling or evacuating money for Hurricane Season, being prepared for a Winter Freeze, or Large Snow Storms. Flooding that came out of nowhere wiped out your house that was in its path. An earthquake that should everything off the walls leaving a massive crack that now has to be repaired. Basically, when Mother Nature gets mad wants to share her angry with the world. Reminder: Emergency cash can be gold when the power is out. You can’t get to your money.
Taxes – Wham! The IRS hit you will a tax return where you owe them. No one likes owing the IRS. It’s always good to have money saved up just in case this ever arises.
Life – Those unexpected problems that arrive in everyday life. You know, like parking tickets, car maintenance, car repairs, home repairs, broken appliances, divorce, recession, or a pandemic that locks down the country.
Yep, the things that happen in life that you have no control over. It is always good to have money put away because when these things do arise, it keeps the stress in the household much lower than if you didn’t.
What’s next now that you know what an Emergency Fund is? Time to move on to the next question – How do I Save For An Emergency Fund?
Another thing that can help in situations like these is to have food storage on hand – What You Should Have In Your Food Storage?
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Karen Carnahan 