Secrets to Saving for an Emergency Fund
(Updated March 2021)
What is an Emergency Fund?
An emergency fund is a fund you set up to cover surprises that pop up, you weren’t expecting to pay. It happens to all of us at some point and having an emergency fund will give you security and less stress. You can take comfort in knowing you are covered when you end up in a surprise situation. If you do not have an emergency fund, it is best to learn how to save for an emergency fund quickly. You can start a mini-emergency fund for now of $1000 and build it up more when you are able.
Do You Need an Emergency Fund?
In short, yes, you need an emergency fund to cover different financial situations that come up unexpectedly.
Imagine you wake up, get ready for work, and start to walk out the door. Suddenly you step into a puddle on the carpet. The next step is an even bigger puddle! Why is the carpet drenched? After searching more, you realize your water heater has flooded! This happened to us! Yes, our carpet was ruined and we needed a new water heater.
Or your son fell off the monkey bars at school, landed wrong, and ended up in a cast. Your insurance doesn’t cover the entire bill and you are left paying around $300. This also happened to us. An unexpected medical bill or two can leave you reaching for your plastic card.
Both of these situations happened to me and my family. These were times when we needed a large amount of money to fix the situation at hand. Fortunately, we had an emergency fund saved to ease the burden of these surprise bills. Whether it be your water heater, new roof, health emergency, car accident or any other situation with a surprise bill, there are times in life when you need extra money above your regular budget.