Do I Really Need an Emergency Fund?

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Emergency Fund title  EMERGENCY FUND

I know you’ve heard the term before, but do you know what it is, why you need one, and how to start one?

An emergency fund is a sum of money that is set aside in your savings account that you only use for (shocker) emergencies. Typically, this amount is $1,000, because that should cover most emergencies including the deductible on your homeowner’s insurance, car insurance or a visit to the ER.

This money should be liquid- meaning you can access it quickly if need be. Your savings account makes the most sense.

If you use Everydollar as your budgeting program, create a budget category for “emergency fund.”

It is not a matter of if an emergency will happen, but rather, when.

Emergencies will most certainly happen, so you need to be as prepared as possible for them. Hence my motto: “Control your controllables.”

Once you create an emergency fund, the panic when your car needs new brakes, your child has to visit the ER, or you get in a car accident will be less. All of these things still cause stress and anxiety, but at least the financial ramifications are not as overwhelming.

car accident

The majority of Americans live paycheck to paycheck, leaving no room for emergency expenses of any kind.

Do you know what the number one reason individuals file bankruptcy in the U.S.?


They account for 62% of all personal bankruptcies.

Think it’s because people are uninsured?

Think again.

72% of those who filed based on medical expenses had some health insurance.

Hopefully, now you’re convinced that you need an emergency fund.

It’s easy to say you need one, but last time I checked, money didn’t just appear whenever I needed it.

The next step is finding $1,000. For most of us, that’s a lot of money- remember over half of us are living paycheck to paycheck so there is no “extra” money.

If you happen to be one of the lucky few with extra money laying around, great, now set aside $1,000 and designate it the emergency fund. Be sure it is liquid.

If you don’t have $1,000 sitting in wait, then you need to do some work to come up with it. FAST

Things you can do to come up with extra money to set up your emergency fund:

• Sell things you don’t use or want anymore on Varage Sale, Craigslist, eBay or at a consignment store
• Have a garage sale, with a little planning you might be surprised how much money you can make
• Don’t eat out until your emergency fund is fully funded

• Cancel monthly subscriptions for a while such as Netflix or premium cable channels. If you want to get your emergency fund set up quickly, consider canceling cable altogether. Now is a great time to watch less television.
• Earn extra money with a part-time job
• Cut out entertainment expenses temporarily. You can find free ways to have fun in the meantime

I know it seems like coming up with a $1,000 is a lot of money, but if I told you that the only way to save your child’s life was to pay $1,000 at the end of the month for a life-saving drug, I bet you would find a way to get that money. Imagine the emergency fund as a life-saving drug and find that money. You will be glad you did when that first emergency happens.

Once you have your emergency fund set up, you will inevitably deplete it at times due to emergencies. You’ll be glad you have the money when the emergencies happen, but immediately after the emergency, you need to get back into saving mode. You will need to replenish the fund back to $1,000 as quickly as possible. Hopefully, through saving and paying down debt, this will be able to happen quicker than the first time.

Amelia surgery
Amelia prior to surgery


It is important to note what is and what is not an emergency.

An emergency is not a “want.” An emergency is a need. It is when something happens that we have no choice but to fix something.

If your brakes go out on your car, it is probably an emergency unless you have an extra car. When the doctor says your child needs to have their adenoids removed and tubes put in, it falls into the emergency fund category; however, braces would almost never be an emergency.


If your dishwasher breaks, it is not an emergency. It may feel like an emergency; however, you can still wash dishes with water and soap by hand. You may want a new dishwasher, but you don’t need one. In that instance, you should start saving extra money every month towards the new dishwasher, and when you have enough cash, you then buy a new one.

Now that you know what an emergency fund is, why you need one and how to save up for one, it’s time to get started. It may take you a couple of months to save that amount of money, but it will be worth it. An emergency in the future will now become more of an annoyance than a debilitating crisis. You can focus on the issue at hand rather than the financial stress of it.

What other ideas do you have for ways to save money for the emergency fund?

I'd love to hear from you.

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