Being financially unprepared for one of life’s unexpected and unwelcomed surprises is one of the worst feelings in the world. There are feeling of helplessness, loneliness and embarrassment. Pride takes a hit as after years of being self-sufficient, one is forced to seek family for help or public assistance. Furthermore, what if you are in a fragile financial state and your heater goes out in the middle of January, or your car breaks down as you are taking your child to school. These things create an enormous amount of stress and can take a toll on your and you family’s health.
The Challenge
We know there are many reasons that challenge our wish to build our emergency fund. For example, households are already facing tough financial circumstances as it is. Families are struggling to keep up with existing payments such as mortgage, rent, credit cards, utilities, insurance or car payments. It doesn’t help that salaries are stagnant despite the rising cost of living. With all the pressure, saving can be perceived as a burden or hardship…. like another bill to pay. It feels almost like a punishment because it is money we are not supposed to spend. Finally, many of us don’t know where to start or think we cannot start with all the above-mentioned circumstances.
Mind Shift
What we need to do is shift our thinking on saving for a rainy day. First, we cannot stress the immense feeling of relief when an unexpected, often unwelcomed, life occurrence comes around – laid off, car repair, heating repair, health emergency – and you say to yourself, “it is a good thing we have enough in the bank to cover this.” In a crisis, you feel much more empowered to do what you must do to manage the crisis and not worry about how to fund it. Here are some very simple things you can do to get to this point:
The Goal
Ideally, we need to try to build enough funds to cover 3 months of expenses — rent or mortgage, groceries, car payment — everything. Once you get there, you want to continue to build that up. If you save enough money to cover 6 months of expenses, keep going to 12 months! The more you save, the more options you will have in your time of need.
Peace of Mind
Financial catastrophe, simply put, is hell on earth when you have been self-sufficient your entire adult life. The stress is near unbearable and you feel like a failure not being able to provide for your family. Avoid this at all costs. The emergency fund will save you from undue stress, your family will feel secure in insecure times, and it will provide you with peace of mind that everything will eventually be okay.
The Challenge
We know there are many reasons that challenge our wish to build our emergency fund. For example, households are already facing tough financial circumstances as it is. Families are struggling to keep up with existing payments such as mortgage, rent, credit cards, utilities, insurance or car payments. It doesn’t help that salaries are stagnant despite the rising cost of living. With all the pressure, saving can be perceived as a burden or hardship…. like another bill to pay. It feels almost like a punishment because it is money we are not supposed to spend. Finally, many of us don’t know where to start or think we cannot start with all the above-mentioned circumstances.
Mind Shift
What we need to do is shift our thinking on saving for a rainy day. First, we cannot stress the immense feeling of relief when an unexpected, often unwelcomed, life occurrence comes around – laid off, car repair, heating repair, health emergency – and you say to yourself, “it is a good thing we have enough in the bank to cover this.” In a crisis, you feel much more empowered to do what you must do to manage the crisis and not worry about how to fund it. Here are some very simple things you can do to get to this point:
- Starting an emergency fund should NOT be stressful. It should provide peace of mind because with it, you will be prepared when you are in a tough spot. Also, you don’t necessarily have to put $500 away at a time if you don’t have it. Start with $25 per month. By the end of the year, you will have $300 which can help with an unexpected visit from the HVAC guy.
- Once you determine what you can afford a month, make it automatic. Ask your employer if there is a way to designate a certain amount to your savings account versus your checking account. If not, check with your bank. Many have recurring auto-transfer capabilities once the funds are deposited to your bank account. Set this up so you do not have to think about it.
- Start today. The sooner you begin the quicker you can accumulate your emergency fund.
The Goal
Ideally, we need to try to build enough funds to cover 3 months of expenses — rent or mortgage, groceries, car payment — everything. Once you get there, you want to continue to build that up. If you save enough money to cover 6 months of expenses, keep going to 12 months! The more you save, the more options you will have in your time of need.
Peace of Mind
Financial catastrophe, simply put, is hell on earth when you have been self-sufficient your entire adult life. The stress is near unbearable and you feel like a failure not being able to provide for your family. Avoid this at all costs. The emergency fund will save you from undue stress, your family will feel secure in insecure times, and it will provide you with peace of mind that everything will eventually be okay.