We have all heard of an emergency fund, where you set a set amount money on the side to use for a rainy day and the unexpected, be it expensive car repairs, medical bills, home issues or anything else that you couldn’t have foreseen and would cost money to tackle. And while most probably have something saved on the side in their emergency fund, they likely hardly ever have to use it (fortunately) and this may lead to a situation where you question whether you even need it or dip into it to pay for other non-emergency items (for example, paying your credit card balance is not considered an emergency and shouldn’t be taken from an emergency fund.
Luckily (or maybe un-luckily) for me, this year forced me to dip into my emergency fund more than once and most of these were real emergencies. Here are some of what I faced and required me dipping into my emergency fund:
-various car repairs to a used car that was recently handed to us as a gift from another family member, after our previous one died on us (money used: $3000)
-various furnace repairs (money used: $1150)
-other home repairs including faucet leaks (money used: $150)
As you can see, through 6 months, we had to dip into our emergency fund some 10 times, totaling over $4000! Imagine if we didn’t have an emergency fund, we would have used our credit card instead and you know what that means in terms of the interest charges that start to accumulate if not paid.
But there is a better reason to have that emergency fund: you feel good, empowered and proud to have saved for such unforeseen emergencies! That is exactly how I felt. While I wasn’t happy about all these back to back and unexpected home and car emergencies, I felt good when I knew I had money to cover these unanticipated popups without breaking the bank or having to use plastic!
With these issues now fixed and in the rear view mirror, I have already started to rebuild my emergency fund, to ensure it is back to its previous amount.
If you don’t yet have an emergency fund, be sure to start saving one right away. Not only will you be happy you did should the unexpected happen, you will also feel good and financially empowered . While it is recommended to have 3-6 months’ worth of expenses saved in your emergency fund, each person and family are different and good start would be to have $2-4K saved.