How We Do It: Emergency Savings

Analyzing Financial Data
Creative Commons License photo credit: Dave Dugdale

Prior to about a year and a half ago, We never ad any type of long term savings.  We were living paycheck to paycheck, but never had debt.  I always felt like we were doing ok, but that we never had money for anything.  We had built up a small savings account before I quite working after having kids, but we really never had any savings for if something big happened.  This made me always worry about things happening.  I always feared that we would have a month without enough.  We were blessed to never have anything happen, but that feeling was one I never want to live with again.

Emergency Savings Is essential to our financial plan.  It is what helps us to make it when we have a harder month, or when we have something come up.  It also lets us take our medical benefits to a high deductible plan.  If we have an emergency we have enough money in our savings to cover it completely.  But if we don’t have an emergency then we are paying the least possible amount.  So our money is stretched further for items like that.

While Dave Ramsey was the one who made me realize the benefits of this, my parents and church have been teaching this for quite some time.  I wished I had listened earlier, but I know that I have changed the family tree and my kids will be raised with that understanding.  So when you are starting your emergency fund don’t be worried if you are slowly building it or you start to compare yourself to others.  It isn’t what you have done in your past that matters, it is what you do from now on.

Even if you only are able to save $10 a month, or less, all that matters is that you are building your savings for something happening, because lets face it, things always happen.  We need to be prepared for them.  This will help you not to worry and feel like you are in so much better control of your life and your finances.

Do you have an Emergency Savings? How long did it take you to build it?

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