Is Your Emergency Fund In Shambles?

Published by moneyqlip

If your answer to the question in the title is ‘YES’ or you’re not even sure what an emergency fund is, I’m glad you’re here!

An emergency fund or rainy day fund is given its name for a reason…it’s cash that you purposefully save for those unexpected events, trials and tribulations life may decide to throw at you. It’s crucial to have this as part of your financial strategy. Without it, the circumstances can be crippling!

Take a moment to think about this, what if you were to loose your job, your car has mechanical issues, a serious medical emergency occurs, or your AC unit blows out, how are you going to cover these unexpected costs? If you don’t have an emergency fund, you may tap in to your current cash or get yourself into debt by using your credit cards. This is a position that you don’t want to be in. Take a moment to get insights on creating your budget and why you shouldn’t rely on your credit cards for an emergency.


To start, you need to give your emergency fund a purpose. I mentioned a couple of life examples and how this can influence the purpose you give your fund but take a moment to really think about this. As an example, my household emergency fund’s purpose is to cover living costs for 6 months in the event that my wife or I loose our jobs. During the 6 months, I am sure (or I hope) we would be able to pick ourselves up with a new job to replace the lost income. Additionally, our emergency fund is there to cover our auto insurance, medical insurance, and home owners insurance deductibles. Anything can occur at any given moment. So what purpose will you give your emergency fund?

Now that you’ve given it a purpose, what’s the next step? Well, make sure that you are living below your meansand that you are holding yourself accountable to the budget you’ve created. Without this as a foundation, you’re going to have a very tough time even funding your emergency fund.


Your emergency fund should have at least 3-6 months of your cost of living. So, if you make $3,000 monthly, you should be saving 10%-15% a month ($300-$450), your monthly costs of living are most likely $2,550 – $2,700 (depending on how much you dedicate to saving). That means that your emergency fund should have anywhere between $7,650 (3 months) to $15,300 (6 months). Another way to think about it, is if you make $3,000 monthly multiple that amount by 3-6 months ($9,000 – $18,000).

Now, keep in mind that this does not include all of the insurance deductibles you may need to pay in the event that something occurs. Double check your policies and make sure to add those numbers to your emergency fund goals!

You may be thinking to yourself, how the heck will I be able to save all of this money!? Well, I’d challenge you with your mindset on how you currently view your money. Give your money more purpose and make sure to have these 3 financial principles as part of your life.  It is possible to save this money because you are currently spending it! The money is slipping away from your finger tips and from every credit card swipe you make as we speak! It all comes down to accountability, having a strong financial vision for your life and for your future self, and remaining consistent and aggressive with your strategy!

Start with a small goal. Try to save $1,000 or what we can call a starter emergency fund. Then set larger goals and milestones you want to achieve until you reach that ultimate goal! Something to keep in mind is as your income grows make sure you are constantly adjusting your strategy! If you get a promotion, a second job, you get married and now you have 2 incomes for one household, make sure to revisit your budget, your strategies and financial goals. This needs to be a living and breathing part of your life!

On one hand, money is great to have to buy the things you want, to travel and to create awesome experiences with your family and friends. Trust me, my wife and I travel all the time! On the other hand, we have those tough and unpleasant moments of financial frustrations and distress. Have your money provide a safety net and to work for you in those moments when life isn’t so fun and when you feel your like your life is spinning in circles.

The emergency fund will be your best friend in those moments, so don’t neglect it!