What’s In Your Emergency Fund? And Is It Enough?
Emergencies happen to all of us–to anyone, anytime. Which is why it’s essential to have an emergency fund!
How prepared are you though?
If you haven’t started an emergency fund yet, the first goal is to save $1,000. In reality though, you should aim to save enough to cover all of your expenses for six months.
What qualifies as an emergency?
First, let’s clarify what an emergency is. True emergencies are unexpected, urgent and necessary events and are legitimate reasons to dip into your emergency savings account. Things like car repairs, furnace/AC breakdowns, medical emergencies and job loss are all emergencies. Buying new home furniture or going on a vacation is not.
Sometimes, emergencies strike and you realize you don’t have enough in savings. And that can be stressful.
Here are a few ways to handle your finances when your emergency fund isn’t enough…
1. Shop around
When a situation is urgent it’s easy to use the first person you talk to that’s available to fix the problem. However, this might not be the most cost-effective approach. Shop around when it comes to dealing with your emergency. Look for coupons, discount codes and other discounts like AAA (if it’s car related).
2. Set up a payment plan
Since it’s an emergency, most people are willing to take a down payment and help you set up a payment plan. This is especially helpful when it comes to healthcare bills. Hospitals and doctors’ offices are usually able to work with you to get on a payment plan you can afford.
Fix only what needs to be repaired now, while you save up for the rest.
4. Sell old stuff for cash
Sell old clothes, furniture or electronics to see if you can get a little extra cash to cushion the unexpected expenses.
5. Pick up a side gig
Consider earning extra money on the side. Use your nights and weekends to freelance (Upwork.com), babysit (Care.com), dog sit or house sit (Rover.com), deliver groceries (Shipt.com), or take online surveys (Swagbucks).
Start saving today to build up your emergency fund. Financial expert Dave Ramsey says it best: “A crisis becomes an inconvenience when you have an emergency fund.”
Feature Illustration: Laura Caseley For The Money Manual