Death, Taxes, and Emergencies – 3 Things We Can Count on Happening

It has been said that the only sure things we can count on are death and taxes. Spoiler alert! There is a third. Emergencies WILL happen (and at the most inconvenient times). Whether it’s an injury, an appliance breaking down, a car repair, job loss, even natural disasters; these things can wreak havoc on our finances. Making ends meet is difficult for so many families, and an unexpected expense can financially derail us.

Emergencies are going to occur, so it is important to establish and maintain an emergency fund. We cannot sustain a budget out of balance. It’s obvious that we cannot spend more than we make, yet these findings from the 2015 FINRA Investor Education Foundation National Financial Capability Study show that our spending and saving habits are not in the best shape.

Only about 40% of Americans report spending less than their income.
Half of the country doesn’t have a rainy day fund.
32% of the country only pays the minimum amount on their credit cards.

Click to see the results of the 2015 FINRA Investor Education Foundation National Financial Capability Study.

Emergency funds help keep our stress level down because we know we are well prepared for whatever life throws at us. Having funds to cover unexpected expenses protects our credit ratings as well as our homes, cars, etc. The big questions are:

How much should we have in it?
Where do we store it?
How can we save enough?

Most financial experts would recommend having, at a minimum, 3-6 months of income in our emergency funds. This provides a comfortable cushion to provide for most unexpected expenses or loss of income. After picking our jaws up off of the floor, realize that this is able to be accomplished with dedication and effort on our parts.

Our fund should be relatively easy to access, but not so easy that we are tempted to spend it on the latest and greatest gadget. Having it tied up in investments may take too long to reach in an emergency, so most experts recommend keeping it in a money market account that has access via checks, debit cards, or online transfers. They earn a slightly higher interest rate than a savings account, and removing funds is easy. Find more information (including interest rates) about Money Market Accounts here.

How on earth are we supposed to sacrifice to save 3-6 months worth of money?!

Check our budgets. There are always ways to save. Here are 8 Ways to Save at Home.
Deposit the money saved by using coupons, switching insurance companies, cancelling cable, bringing lunches to work instead of eating out, etc. into our money market accounts.
Sell things we don’t use or need like furniture, textbooks, tools, video games, clothing, and home goods. Take part in neighborhood garage sales, or partner with friends, family, or neighbors to host our own. There are so many websites dedicated to selling our excess items (our neighborhood even has its own on Facebook), that ridding our homes of things that have outlived their useful purpose is relatively easy. Craigslist, ebay, LetGo are just a few (make sure to read and understand their policies before using their services). Antique stores, consignment shops, and even pawn shops are other options. Of course, money made needs to be deposited into our money market accounts.
Pick up some side work. Driving for Uber or Lyft, delivering through services like Favor Delivery or Door Dash, taking marketing surveys, and doing data entry from home are just the tip of the iceberg when it comes to making some extra money. I follow The Penny Hoarder for lots of tips. They have a whole section dedicated to Making Money and include ways to work from home and side gigs. Squirrel the money away for your emergency fund!

Realize that Rome wasn’t built in a day, and neither will our Emergency Funds, but committing ourselves to adding a certain amount each month will eventually fully fund it. Involving the whole family in finding ways to save can actually be fun and teach everyone a valuable lesson!