Have you ever seen a trapeze artist?
They’re flying around in the air hanging onto a rod or some ropes.
All they have to save them is the net below.
If their hands get sweaty or they miss the bar when moving to a different one, the net is the only thing saving them.
In a sense, our lives are essentially the same way.
But instead of a net made of nylon, your net should be an emergency fund.
Without an emergency fund as a safety net, one small disaster is all it takes for a financial situation to go from okay to self-destruction.
When working hard, taking care of family, running around like a madmen everyday, and then an unexpected expense comes and there’s nothing saved up, what do you do now?
Having a safety net for an emergency is something everyone needs.
To put this into perspective and really drill how important having a safety net is, here are a few facts to hopefully enlighten you:
1/4 of Americans, or around 55 million people, have nothing saved in an emergency fund.
If an unexpected expense of about $400 comes up, about 60% of adults could come up with the expense. Around 27% would have to sell something or borrow to pay it off and just above 10% wouldn’t be able to cover the expense at all.
How To Start
What I would recommend is making a separate checking/savings account to have the account just for the emergency fund. If there is only one account, then you’re likely to spend the money that’s currently there.
Setup automatic transfers once the paycheck goes through, so you don’t forget and the fund continues to increase.
Don’t touch this emergency fund unless it’s something outside of the normal monthly expenses.
You might not have an emergency fund at all right now, but there is no better time to start than today.
At first, start with what you can. If it’s only $5 per paycheck, then that’s what you put into your account.
Look over the expenses and see what you can cut out and save instead. One less trip to Chipotle a week is an increase of about $40 a month.
Eventually through time and saving paychecks, the fund will grow.
If you have to start small, then go with it. All that matters is you’re saving money for the unexpected expenses.
The thing about unexpected expenses is they are going to pop up.
This is how life works. Accidents happen, so it’s better to be prepared and have the money ready than not have the money and need it.
Start today and you will thank yourself later when you need it the most.
Thanks and Be Great,
Links to the facts I used: