Lightening Online

Heading interstate for this funeral has highlighted to me the importance of an emergency fund. Some time ago, as part of my quest to sort out our financial situation, I came across Dave Ramsey’s website. I wouldn’t say that I’m a 100% Dave Ramsey fan but he makes some points which I do agree with. One of which is the absolute importance of having an emergency fund.

In fact, the first thing he recommends that everyone do, even BEFORE tackling consumer debt, is to sock away small amounts of money until you have $1000 set aside labelled “emergency only”.

Now $1000 might sound like a lot but believe me it doesn’t go that far these days. It cost us almost $1000 to head away for the funeral we went to last week. By the time you have travel costs, accommodation and food, the expenses can add up really quickly.

How would you go? Could you find $1000 quickly if you needed it? Believe me, it was an absolute BLESSING to have that money sitting there, ready and waiting for a moment just like this. We didn’t have to even think about the cost of going. We were just able to do so.

I’ve heard Dave Ramsey describe an emergency fund as “Murphy Insurance“. In other words, having a bit of money set aside “just in case” actually seems to help stop Murphy in his tracks. At least if something does go wrong, you’re not left in a financial hole quite the same and therefore Murphy can’t “kick you while you’re down”.

You Must Be Loaded to Have a Spare $1000 Sitting Around

I don’t believe we are loaded. We live off one income which is becoming rarer and rarer these days. Admittedly our single income is higher than the minimum wage (most years) but achieving our emergency fund was more about determination than having a surplus amount of cash. I could come up with a dozen or more justifiable ways to have spent that money. But our belief in it’s importance was higher than our desire to spend. In the end I’m really glad we achieved it.

5 Steps To Help You Get an Emergency Fund Started

1. Open a Separate Bank Account

If you see it, you’ll spend it. If you keep it in cash, you’ll spend it. Look for a bank account that will give you a little bit of interest. If you’re worried about extra bank fees, consider an online account. Often you can get reasonable interest on money at call through those types of accounts. Sometimes the only amount I’ve been able to add to my emergency fund total for the month has been the interest on what I already had. That’s okay, it’s all PROGRESS.

2. Do Not Consider Any Amount Too Small

Lots of little amounts add up to bigger amounts. It is surprising how much at times. Put aside your silver change, forgo a coffee every now and then… there are MANY different ways that most people could find to add a dollar or two here and there to an emergency fund.

3. Be DETERMINED

It really is AMAZING what we can do when put our minds to it. One thing I learnt a few years back was the saying “it’s not what you earn but what you DO with what you earn that makes the difference”.

4. Think in Babysteps

It’s easy to get overwhelmed and think that $1000 is totally out of our reach. Do what you can with what you have. Maybe you’ll never make it to $1000 but then again, maybe you will. You won’t know until you try.

If it helps, break it down into hundreds. Aim for $100 in the account, then $200 and so on.

5. Start TODAY

It’s easy to put these things off thinking we’ll get around to it sooner or later. Even if you can only find $10 this MONTH to put into an emergency account, it’s $10 more than you would have had if you’d left it in your purse.

Make a commitment to start today. Run around the house and see what change you can gather up to get things started.

Blog about it and perhaps get yourself a ticker to keep yourself accountable (if you do this, let me know and I’ll come over and be your personal cheer squad ).

You won’t be doing this alone. I have some replenishing of our own emergency fund to do.