The establishment and maintaining of our emergency fund is what put us on the path to building wealth and staying out of credit card debt.
We started our marriage without an emergency fund. Although we did get
some nice cash gifts, including $1000 from my parents. That is where our
emergency fund began. We had already bought and paid for enough
furniture to fit in our apartment. We were happy with what we had, so we
decided to save it.
I suppose that decision right there comes from somewhere, but we did
consciously make that decision to hold on to that money. I'm not sure we
even called it an emergency fund then. I didn't know about Suze Orman,
Mary Hunt, or Dave Ramsey, all who would have encouraged the emergency
I know many people who do not have an emergency fund and they all
struggle in some way financially. For many it means debt in every form,
for others it is relying on others for help, and most of them don't even
save much, if any, for retirement.
Establishing an emergency fund is the one thing you must start. And it
often means sacrifice to do so. In our case, we didn't sacrifice much
with the first $1K, but in later years, we went without many things to
make sure we had established and maintained a rainy day fund.
I will tell you that every sacrifice you make to establish your
emergency fund is worth it. It is worth it to forgo cable, even if the
big game is on. It is worth it, to eat simple meals at home. It is worth
it to keep your tax refund in your savings account than buying a new
big screen television. It is worth doing your own nails, or coloring
your own hair. Many here on Saving Advice would agree.
Yes, you will have to give up some things, if you are living paycheck to
paycheck. The exercise in sacrifice for this one goal will teach you
more than you can know. You will find you can live without many things
and still be happy.
Emergencies happen. People get sick, or in accidents. People lose their
jobs. The water heater or garage door breaks. Your pet is injured. Many
many things come up in life that can not be planned. An emergency fund
catches you when those unplanned events come up.
Sacrificing as much as you can for a short time to establish an
emergency fund is so worth it. If it sounds like I'm talking to you, I
am. You don't need a new car now. The vacation CAN wait. You can watch
the big game for free at your friends house or a bar. You can do your
own nails and hair coloring. You don't need to buy that new thing, yet.
You can wait. You will live. That new thing might be cheaper on Ebay in
six months. You need to establish your emergency fund now. You NEED to,
no excuses. It has to come first.
Yes, you might have debt and you could pay it off with your tax refund.
If your refund covers all your debts then yes, pay it off. And then
start on your savings. However, if it will take you many many months to
pay off your debt, turn your tax refund into your starter emergency
fund. Five hundred to $1000 is a great beginning. Let it sit there in an
account. Look at it, but don't touch. It's for emergencies.
No more excuses. It's time to start your emergency fund. Tell me how you
started your emergency fund. Any advice to readers on ways to save?
Where to save? Join in the discussion, now!