Why You Need To Start Building Your Emergency Fund Now

Why You (2)

One of the most important habits I learned when I was young and broke- probably the most important- was setting up an automatic transfer every month into my savings. It took a year to save my first $1000 emergency fund back in 2003, and that meant squeezing $85 a month out of a tight budget to set aside. I won’t lie, I worked a full-time job and a part-time job while I was in school full-time in order to make it happen.

An automatic transfer to savings is a transfer that does not require you to log on every month  or walk into a bank to transfer funds. If your employer direct deposits your paycheck, sometimes they allow you to direct your check into two different accounts.  You can also do as I do and set up a recurring transfer on the same day every month to transfer a portion of your paycheck into a savings account. Doing this forces you to live on what’s left and helps to keep you from backsliding on your savings goal.

I am so glad we keep several months of expenses in our savings. Just this month, we dealt with a dead cell phone, $500 medical expense, reverse osmosis filter on the fritz, and a tree that fell on our house. We always joke that our emergency fund was our “if the house caves in” fund, and we got a small taste of that when the recent storm hit. We have insurance, but it didn’t cover everything. We already had to pay $1300 out of pocket, and there may be more, depending on the roof inspection results.

We were lucky that our tree didn’t crash through the roof of our daughters’ room, injuring or killing them both.  God forbid, if it had, we would have been able to handle the medical expenses or funeral.

If it had happened to you, would you have been able to manage it, or would you have been scrambling to deal with the financial fallout along with the emotional and physical fallout?

Not having an emergency fund is truly an emergency.

I will be honest- something terrible is going to happen to you or to someone in your family. I don’t have to be psychic to know this. It’s a fact of life. Everybody dies. Accidents happen. Illness happens. No one is immune. Your time is going to come.

The lesson- be prepared. Start preparing now.


I see so many GoFundMe shares on Facebook lately. I think it’s wonderful that people are willing to help each other, especially when a member of the community has been struck with a devastating illness, tragic accident, or unexpected death.

There are certainly some emergencies that you can never prepare for, and I am no different.  If I became seriously ill and we had not yet paid off our mortgage, it would be very difficult for my husband’s salary to cover the mortgage, a nanny, and medical expenses. That is one reason why we are focusing intently on hustling for more income, paying off our mortgage, and investing what we can. We want our family to be covered for nearly all possible outcomes.

I want you to be ready too. That’s why I say this out of love- you can’t rely on GoFundMe to cover you in an emergency. It doesn’t always pan out.

If you are starting from scratch, ask yourself this:

  • If you suffered an accident or an illness, do you have enough to cover the deductible for your medical insurance?
  • If your car was totaled, do you have enough to cover the deductible for insurance, plus enough to cover a new-to-you car?
  • If you lost your roof in a storm, could you cover your homeowner’s insurance deductible, plus the cost of a hotel for a few weeks?
  • If you or a family member died, do you have enough to cover the funeral you want or that your religion requires?  A burial plus cemetery and headstone can easily cost $10000 or more.  (The mister and I plan to opt for immediate cremation without a viewing, a small memorial at home, and scattering at sea or in nature.)

Use that as your starting point and calculate how much you have to save every month to cover it.

And while you are thinking about it, and imagining what would happen if the stuff hits the fan for you, consider getting term life insurance. I had it through work when I worked full time, and I am no longer eligible for it. I really, really wish I had gotten some a few years ago, before I developed autoimmune issues that makes it insanely expensive. Don’t make my mistake!

What about you, are you prepared for an emergency?