Emergency Fund?

 

I was listening to KLove the other morning and they were talking about how more Americans are valuing the importance of an emergency fund. There was mention about how some of us had grandparents that grew up in the depression and they had (or have) a different view of money than many do, but that view maybe coming back in vogue.

It is always a sticky topic and even when I google'd it was hard to tell what the 'right' amount money to keep in an emergency fund is, so it seems so overwhelming what number to you strive for? And even if you have a number in mind it can seem out of reach because it will take discipline and time. It is also tempting because you see the money sitting there but you can't use it. What do you do?

And let's not forget that many people are living paycheck to paycheck, which will certainly mean it takes longer to build that account, and probably more likely that they will need to tap into it.  

Are there different types of emergency funds?

As I was writing this I realized that most people will automatically think of a savings account of some type as their emergency fund and that it is strictly a money account.  But I think there are other types of emergency funds, and again the size of these funds can vary depending on your needs and space. Different types of funds could include: pantry/food items, laundry items, paper goods, entertainment items.

Everyone lives in different sized houses/apartments. Some maybe bigger than mine or smaller.  Additionally family sizes are different, for the Padawan house it is 2 adults and 2 children. Other families maybe larger and possibly multi-generational, and some may be smaller.  All of those things are going to influence how small or large these other emergency funds are.  

1. I have a pantry set up in my basement that I use for non-perishable food and paper goods. I have always had one, but over the course of the pandemic it became more organized and thoughtful. I am in the process of upgrading it to make it easier to use. It certainly will not sustain us for months but it gives us a nice cushion in the event that we cannot get to the store.
   
2. I also have a bit of an emergency fund in terms of entertainment items. I like to do crafts so I do have projects stored away that I haven't yet started and general supplies for when the mood strikes me. Not to mention we have decks of cards, and board games just in case we don't have access to electronic entertainment.

Do you have an emergency fund?

As you ponder that, maybe you do have one or maybe you are trying to build one, the question is always going to be out there, how much and what kind of fund should you have? I am not a financial advisor so I am not going to tell anyone what to target. Some things (this list is not exhaustive) to think about when trying to figure out what your emergency fund balance should be are:

• recurring bills (non food)
• electric
• gas
• water
• cable/internet (and streaming services)
  
• cell phone
• car/house/renters insurance
  
• food bill from the grocery store
• food bill from eating out; meals, snacks and coffee
• entertainment fund
• gas for your vehicle
• memberships
  

Figure out how much it is to pay all of that and then decide what you feel comfortable with. Do you want to be able in an account do you want to be able to pay your expenses for 1 or 2 months? 3?  Talk to a professional if you are unsure but start that account.  Yes it will be difficult to grow it, and see it but not touch it unless it is truly an emergency.

How to fund your emergency account

How you grow your fund will certainly depend on your individual circumstances.  Maybe you can move that amount you determined is right for you in one fell swoop, but realistically most people will need to build it incrementally. This is where patience pays off and you can feel a sense of pride as you add to the fund, and accomplishment when you achieve it.  And don't forget to maintain it, if your life changes and your expenses go up, remember to up your emergency fund.

• Maybe you will get lucky, and after looking at your list of bills you can see that you were paying for something you never use, if that is you awesome, cancel that service and deposit that money into your emergency fund. Don't be discouraged it will take time. 
• It is perfectly understandable to start with $5 or some small amount and it can seem pointless because it will take so much time. However, once you start making savings a habit you can up the amount as your circumstances change.
• If you get some unexpected money, win a prize, unexpected bonus, tax refund, consider putting it all (or at least most) of it into your emergency fund. 
• Search your state's unclaimed property division to see if you have anything listed there.
  
• Utilize frugal fun sources
• Libraries are a great place for books, music, and movies in physical and electronic forms, with the electronic items you generally don't even need to go the the library.  
• Some libraries even allow you to check out 'things', my library will check out a telescope, sewing machine, and they even have some fancy cake pans.
• Some libraries offer discount passes to museums and attractions
• Local, state, and federal parks are great places to get away and great places for exercise. Pack a lunch and chill in the outdoors or have an adventure.
  

This is not an exciting thing but a necessary thing and can ultimately make your life happier because you know you have that safety net.