If your car broke down tomorrow, would you be able to pay for the repairs?  What about your washing machine or air conditioner?  If you are living without an emergency fund, you are living like a gambler.  You may be okay for a while, and not have any emergencies, but trust me, one will come eventually.  What will you do when that happens?  How will you pay for the unexpected car repair or medical bill?

If you don’t have an emergency fund, you are fairly normal.

 Fewer than 1 out of every 2 Americans has money in savings to cover an unexpected expense.  

I used to be one of those people.  I never really thought about emergencies.  I was young, healthy, a fairly good driver (debatable per my husband) and I rented (all repairs would be covered by my landlord).  I always thought if I had an emergency I would just put it on a credit card or try to borrow it from a relative or friend. Good thinking, right?

So Wrong!  

Without savings available, you are making yourself vulnerable to:

• taking on more debt,
• ruining family relationships if you borrow money and
• adding unneeded stress to your life.  

Emergencies are going to happen.  That is a fact.  It will only be a matter of time before something happens in your life.  I went from never having an emergency to all in one year we needed unexpected car repairs performed, our air conditioner went out (in July, when I was 9 months pregnant) and our basement flooded due to a blocked pipe from a tree root (literal backflow of poop in my basement, disgusting).

If you know an emergency is coming, why wouldn’t you save for it?   Thanks to our emergency fund, instead of stressing about how we were going to pay for the air conditioner repair, we could call someone after hours to come out on emergency (because I know I would have died without air conditioning that night) to fix it.  We had $1,000 in savings specifically for this kind of event so it wasn’t a big decision on when to have it repaired.

When setting up an emergency fund, the best amount to have saved is $1,000.   When you think about all the emergencies that can randomly occur, most of those can be managed easily with $1,000.  The beauty of this number is, it is fairly reasonable to be able to save $1,000, and when it is used for something, you should be able to get your fund back up to $1,000 pretty quickly (assuming you are rocking it with your budget).  Of all the things that have happened to us since we started budgeting (you know because that’s when all the emergencies started happening), we have yet to meet one that our $1,000 wouldn’t cover.

Use our FREE Savings Countdown Coloring Sheet to motivate your $1,000 savings.  Gain instant access by signing up below!

What I find to be the absolute best part of having an emergency fund is the peace of mind it gives me.   

As women, we crave financial security.  I didn’t know how unsettled I was with our finances, and what an impact it had on my overall stress level until we started budgeting, and had our emergency fund in place.  Knowing there was $1,000 in our account at all times in case something bad happened was such a freeing thing. 

Imagine you get a flat tire on the interstate.  It’s summertime, it’s 1 million degrees outside, you don’t know how to change a tire and you have no money in savings.  You need to call a tow truck, and then have the tire repaired.  The stress and anxiety are building as people drive by because you don’t know how you are going to pay for this and you are completely stuck.  Such a stressful experience!

Now imagine the money you need to get a tow truck and repair the tire isn’t part of your stress equation because it is already saved for.  Your only worry is how soon the tow truck can get to you and what beverage you will have to cool off while your tire is being repaired. What an amazing feeling!  Trust me, this will give you so much peace, and take away worries you probably didn’t even realize you had.

Once you have your $1,000 emergency fund set up, it is very important for both you and your spouse to understand what constitutes an actual emergency.  

• A broken water heater,
• unexpected car repair,
• broken air conditioner,
• a burst water pipe; those are emergencies. 

A flash sale at your favorite store – NOT an emergency.  Going out to dinner because you really need that night out is not an emergency. Christmas shopping is also not an emergency (those would all be sinking funds).

Make sure you are clear on the definition of emergency within your home and hold each other accountable.  We always check with one another before we dip into our emergency fund, and before we even take the money out, we are already having a discussion about how we will replace the money as fast as possible.

Pin this as a reminder!

How do I find $1,000 to put into this emergency fund?

When you are first starting to budget and get your emergency fund set up, it can be a bit intimidating to try to save $1,000 when you haven’t saved before.  If you are struggling to find any extra money in your income to put toward the emergency fund, go back to the basics. Find ways to reduce your spending, increase your income and budget to the cent (get crazy!).  If you are looking for some creative ways (these are the things I have done over the years) to save $1,000 fast, with minimal effort, check this out.

Start budgeting with our FREE Basic Budget Setup Forms and find that $1,000 fast!  Sign up below and gain access to our FREE resource library!

What if I already have a savings account?

If you are one of those people who already have a hefty savings account, take $1,000 of that and put it into an account specifically labeled emergency fund.  If you have any debt, take the rest of your savings and throw it at your debt.  You do not need $8,000 in savings for emergencies while you are still in debt.  

$1,000 will be sufficient to cover most emergencies you will run into.  If you don’t have any debt, then you should continue to beef up your savings until you have 3-6 months of living expenses available.  This is the ultimate emergency fund to have available.

No matter who you are, an emergency will happen to you at some point.  Be prepared for the inevitable by having $1,000 set aside for these “unexpected expenses.”  The freedom it will give you from worry is such an amazing thing.  Get started building your emergency fund today, and lower your risk of adding more debt and stress to your life.  

How fast can you save $1,000?  How did you make it happen?

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