Emergency Fund Guidelines: Do it your way!

We often hear how many families can’t manage a small financial emergency, even as small as 400.00. Sometimes, we are bombarded with the idea that we need 3-6, 9-12, or more months of an emergency fund.

While meant to inspire us to action, these messages can cause us to flee from action because it seems impossible to achieve. While indeed sound, these suggestions are not as actionable as they would be when you choose the route without being judged by outside influences. 

It’s okay if you can’t immediately start building an emergency fund. Don’t let other people’s judgments discourage you. The best approach is to start an emergency fund that works for you.

People can be overly critical about how much one should save for potential emergencies, but it’s essential to decide based on one’s circumstances. Remember, it’s all about you and what you can realistically achieve.

What is an Emergency Fund?

Generally, it’s money that you set aside for unexpected expenses. Face it: there are always curveballs thrown at us. How we respond often depends on how we can respond financially.

What do you do when your car quits unexpectedly, your job cuts back your hours, or you get a bill that can cause you more distress if not paid immediately?

Often, we panic and get stressed out.  But what if you had even a tiny reserve fund that allowed you to breathe a little?  That’s what an emergency fund will enable you to do: breathe a little easier when you can cover unexpected expenses.  

What is truly an emergency, and what’s not?

Depending on who you ask, an emergency can mean different things to different people. Accordingly, when considering a true emergency, we speak of things we did not see coming. For instance, emergencies that prove unpredictable, unexpected, abnormal expenses in our financial lives, but we must deal with them. 

No, we aren’t talking about tickets to an unplanned event you want to experience. We also aren’t talking about the newest purse or gadget on the market. We are talking about those things that you could not have predicted and haven’t planned for. Without savings on hand, what will you do?

Where can you keep and how do you manage it?

1. When you are just starting, decide where to store your emergency savings. This can be as simple as a savings account at your local bank or credit union.
2. Or, if you want to get a better interest rate, you could choose an online bank that offers high-yield savings accounts. They can afford to pay you more in interest because they have less overhead than a brick-and-mortar institution.
3. Forget the fearmongers and start with what is comfortable for your pockets. Consider the amount you need to cover your weekly, monthly, or yearly expenses.
4. Don’t feel compelled to save the same way everyone else does. This is your opportunity to set your course of action based on what you and your budget can handle. Just remember to be regular and consistent.
5. Make it automatic. This way, you won’t have to overthink it or do anything extra to accomplish your goal.
6. Indeed, when you make more money, save more because you decide you are ready to do so.

Essential Takeaways: DO IT YOUR WAY!

Do it today! Forget the fearmongers! Do what works for your pockets! Make it automatic!