Funding Your Emergency

Alright people, this is going to be a quick one. You need an emergency fund.

Where is this coming from? Well, I was in an accident yesterday. Thankfully no one was hurt. But it was a frightening experience; one that reminded me of the necessity of an emergency fund.

You never know what's going to happen. Accidents are accidents because they were not intended. You can't plan for them, but you should be prepared for them. What happens if you find yourself unable to work & running low on funds? Unless you have that duck-endorsed insurance, you could be in real trouble. It is yet another reason not to spend more than you make.

Pick an amount that you know you wouldn't miss on a monthly basis, $25, $50, $100. Skip that extra cup of coffee or bring your lunch from home for a couple days, there's $25. The amount you can spare is not as important as putting it away with consistency. Open an Emigrant or ING online savings account and set it up to automatically transfer your savings from your checking account. You don't have to think about it, you don't have to do anything, and you chose an amount you can live without, so you probably won't even miss it.

The next step: Forget about that account.

Until you have an emergency where you need the money you've been saving (and the bi-annual Nordstroms sale does not count), that money doesn't exist to you. It is off limits, out of bounds, locked behind an electric fence. It is there for your own personal rainy day. It is your umbrella. We all know that when it rains, it pours; so get to saving now so when if your rainstorm should flood your life you can keep your head above water.

Want to feel really secure? Aim to have 3-6 months of your living expenses saved. If you're self-employed, double that. It may seem out of reach to have 6-12 months of expenses saved, so don't look at it as needing to save all you spend in a year. Break it down into smaller goals. Save 2 weeks' worth of expenses. Then work to a whole month. Then six weeks, eight weeks, and so on. Break it down as much as you need to get it done.

The key is to start. You have to start. Go now, open an online saving account (if you don't trust online banking open a savings account at your bank; the interest you earn won't be as high, but if that's what you need to do, do it).