Financial Literacy Month: 9 Things to Include in Your Emergency Fund

Financial Literacy Month (1)

  1. Essential Monthly Expenses: Experts say to have at least 3 months set aside in this account, but I recommend setting aside as much as will make you feel secure. It’s nice to have a cushion if you’re laid off from your job, which just happened to a friend of mine earlier this week. 6 months to 9 months worth of expenses would be even better especially if you don’t have disability insurance, you could really be in a pickle if you find yourself disabled for awhile and unable to work. This would include: rent/mortgage payments, insurance, utilities, food, any other bills you need to pay regularly. This is not to scare you! Just to give you ideas for what you’ll need to include for setting your savings goal.
  2. Auto insurance deductible: Like many people, my bad luck tends to come in multiples and escalate rather quickly. It would be my nightmare to be in an accident while unemployed. Too much stress for me! Especially if I wasn’t prepared. It’s important to know that you would need that deductible so you could get the repairs you need, back on the road quickly, and back to living your life. If you don’t know how much your deductible is, you can look it up in the policy. Or you can contact the customer service line for your insurance provider.
  3. Transportation: If you don’t drive, perhaps you bike or use public transportation to get around, keep a bit of money set aside to make sure you can still do what you gotta do! Your goal is to have money available for metro passes, replacing bike tires, etc
  4. Emergency Room Copay: I try to make I always have enough money for that rather pricey copay should I need to go to the emergency room. I’ve seen them range from $50-$100, but I wouldn’t be surprised if it were more. I once had a roommate who nearly broke his toes off (I’m not exaggerating!) while running through the house. As he was running past the staircase, he hit his foot in such a way that he kept going while his toes stayed behind…it was an interesting Saturday night, let me tell you. There was blood, DEEP wounds on his foot that almost went to the bone! But did this fool go to the ER? No, because he didn’t wanna pay the copay. He waited almost two days before he went to get treatment and by then it was really bad. So, I beg of you, please please pretty please create the space for you to get care if you need it!
  5. Essential Home Repairs: If you own a home this is an important consideration for you. You may need to set aside a few thousand dollars for this miscellaneous expensive disasters. What if your refrigerator breaks? Granted you could go without cold food for awhile but that’s not the most practical option. Other pricey events could be having your house tented for a surprise termite infestation, or dealing with the drama of a plumbing disaster.
  6. Unemployment expenses: These typically aren’t too much, but it’s good to have a couple hundred dollars set aside should you be in the situation where you need to look for work. This money would give you a little cushion to have the transportation money to get around to interviews, purchase some inexpensive professional clothing, and pay for those miscellaneous hiring expenses. Sometimes you’ll have to pay for things like a background check, exam fees or a special licenses that you are reimbursed for later on.
  7. Childcare: If you do have children, I know childcare costs are no joke! It’s not a bad idea to include that in your emergency fund goal to make sure they can go have fun with their kiddie friends and you can handle business during that time. At least for a month or two so you can give yourself time to make other arrangements if you won’t be able to continue with your current childcare provider.
  8. Pets: For most people, pets are part of the family so we have to include them here. Veterinary expenses can hurt your pocketbook in the worst way, but Mr. Snuggles needs his healthcare too. Take care to consider his needs so that if you are ever without consistent income, you can still take good care of him.
  9. “Oopsies”: There are some of those really peculiar expenses that no one saw coming, like that time you had to bail your friend out of jail for sassing a DMV clerk or that other time you had to buy your grandma a new full lace Indian Remy wig because hers flew out of the window on the freeway…Okay, I let my imagination run wild with these examples, but you get the picture. Sometimes, random things happen that we can’t precisely plan for. All we can do is set aside a bit of money and hope for the best.

I hope this gave you some ideas for how you start building up your emergency fund. I remember when I first started building mine, I didn’t understand what kind of things I should include but here’s what I have learned over the past few years. If your emergency fund is sufficient, you’ll prevent yourself from having to run up your credit balance. Which is a nice sigh of relief because it’s all fun and games until you have to pay it off.

Have you started your emergency fund? What is your goal number to have where you will feel safe and secure to weather any storm? Comment or Tweet me to let me know!

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