that girl jen

Shit happens, and when it rains, sometimes it pours cats & dogs.

I’ve been helping clients with their budgeting and teaching them how to better utilize their money. Their success gives me a sense of happiness. I like hearing good news, who doesn’t?

But then, there are those times in life when the bottom falls out from under you, the shit hits the fan, and you’re in a sinking boat armed with a slotted spoon.

I’ve been there in the past, don’t ever want to be there again.

So an emergency fund, what is it; How much do you need; and what is an actual emergency?

Well let me tell ya, it’s not a new hand bag or video game that just got released. That’s not an emergency! A blown tire, AC needs repaired, washing machine or fridge broke; Or my favorite, a super sick Pug that has to go to the vet STAT, those things are considered an emergency.

How much do you need? Well that depends. When you’re in debt to your eyeballs, it’s really tough to rationalize the idea of “saving for a rainy day,” especially when there’s a credit card close at hand. So many people think, “Well if it’s an emergency, I’ll just put it on a credit card.” But it’s that kind of thinking that usually and eventually can lead to debt. One swipe of the card, and the cherry has been popped, then that card starts to get all sorts of charges on it, sometimes leading to an out of control balance.

So a good general rule of thumb – as per “Uncle Dave” is to get $1,000 into a separate savings account. That’s a good start. But what do you do when you have bills to pay and credit card debt. Saving any amount of money can be difficult.

For most people I’ve worked with it takes on average, about 6-12 months to save up approximately 1K. What’s been interesting is the usually right at about that 6 month mark, something happens, and that emergency fund needs to be used.

The best feeling is being prepared for when something happens, and you have to tap that emergency fund. The sense of relief that while you’re trying to get out of debt, you’re actually able to cover some unplanned situation, and not add to your total debt balance, well that’s just a relief.

So while trying to pay off already accumulated bills, make an effort to SAVE. Try saving $20 a paycheck. Transfer that amount to a separate savings account as soon as your paycheck check hit your account, many companies allow you to allocate funds at the time of transfer.

Either way, if you don’t start saving, you won’t start building that emergency fund. Sure it may be tempting, seeing that savings account grow. There will be handbags, video games, a night out, or a vacation that’s calling your name… but if you make a few small changes and save those funds instead of allocating them for fleeting moments, you’ll soon have your very own emergency fund. And once you get into the habit of saving, it becomes easier and less tempting to spend that money.

So if you’re one of those people that “can’t save” I dare you to try it. Start with $20 a paycheck, then increase it every month by $10 or $20. Soon $50 will be a piece of cake! It takes a bit of time, but you gotta start somewhere.

Having an emergency fund takes discipline. For some having an accountability partner, someone to help keep you on track, is a great service. It’s a service I provide, so if you’re looking for some help, LMK – and comment below! 🙂

• Finance