About three months ago, I hit a tree during a snow storm. Thankfully, I was able to walk away without getting hurt or injured. However, my car was deemed undrivable with damage to my fender and suspension. This was not planned whatsoever. However, I took a breath of relief as I knew that I had the funds in a savings account to cover the cost of my rental, deductible and other expenses
Thankfully, I have begun saving since I started my full time job for an emergency fund. Now, you may be asking, what exactly is an emergency fund? Well, an emergency fund is something that urgent that comes up that is unplanned.
So what is an emergency? Here are a few examples of when you would need cash fast:
1. You lost your job, and you need to pay bills.
2. Your car breaks down.
3. You are having any kind of home repair that came up unexpected.
4. There is a death in the family and you need to travel/deal with it fast.
Dave Ramsey teaches those who follow him to save at least three to six months of expenses saved. And, I agree to that to some extent. It’s really assuring to have that money set aside for things when your car isn’t starting and it’s on its way to the mechanic again so you don’t have to worry about having to come up with more money or use a credit card. He recommends keeping this money out of your checking but is easily accessible (i.e. savings/money market account).
This was one of the most expensive money lessons that I had to learn the hard way. About three years ago, I had a flat tire from running over a curb. The price? $375. At that time, I did not have that saved, and I had to ask my mom for help fixing it. Since then, I learned that I need to start putting aside cash for those moments, because believe me, they do happen.
That said, here are some ways that you can build an emergency fund:
- Sell items on Poshmark
- Put aside a percentage of your check everytime.
- Get a side hustle.
- Cut expenses as much as possible.
I have been actively saving for emergencies, even though I am way over that $1,000 threshold. That said, even though I had that amount saved and I paid cash for all of the repairs done on my car with the accident, it still stung having to get that amount taken out. I felt discouraged, almost as if I did something wrong instead of thanking myself for thinking that far ahead.
It took me a moment to realize that sometimes, life happens and we have expenses that are not planned. That is why it’s important to save for them. I am currently working to get my savings account to where it used to be, and that is going to take time. In the mean time, I can do my best to continue to grow my emergency fund as much as possible.