Episode 13 – The Importance of Having an Emergency Fund

Start100K

Full Article: https://start100k.com/?p=93

Imagine this, you’re working to get your finances on track, paying down debt, and your car breaks down or you have an emergency room visit and have to pay a deductible. If you have an emergency fund, you pay for it with your cash and then build it back up and move on. If you didn’t have the emergency fund, you would now likely have to borrow that money which would further compound your problems.

I know for us, having the cash on hand for these things has greatly reduced our stress. What’s interesting is that we have never used the emergency fund, but we also avoid touching it like the plague. We are generally able to get creative and adjust our expenses if something difficult arises. We might end up running on thin margins or pulling from other savings, but having that buffer really puts us at ease.

For us, we keep the emergency fund in a totally separate bank from our normal checking and savings so that way we aren’t tempted to use it for random things. We do have a checking account at that bank, so I can transfer and use the money almost instantly if needed. This might not be necessary, but for me, being able to keep it separate and label or nickname the account as the emergency fund creates physical and mental separation from everything else. In other words, it just keeps it simple.

I hope this gives you something to think about and helps clarify some of my previous discussions on emergency funds.

As always, I’ll leave you with some Action Items:

1. Decide where to keep your emergency fund and name the account the emergency fund if possible
2. Make a plan on how to build up your emergency fund and how much you need to save. Generally 3-6 months is considered a good baseline.
3. If this has been helpful, please share the podcast with someone you know. I’m trying to reach my first 100,000 people, so every share counts and is greatly appreciated!

To contact me, please email [e-mail].

Now go get started!

Before you go, please remember this information is for educational and informational purposes only. Please seek tax, legal, or investment advice before making any decisions.