What if you had an unexpected bill for new car tyres, or for fixing the boiler, or maybe you need money to pay your bills because you have been made redundant. Do you have those funds available now? If not what would happen, would you ask for help from friends and family, take out a loan or use a credit card? Not having those funds available in your bank for the unexpected events can be scary, which is why having an emergency fund is so important.
An emergency fund is just that. Money set aside that can cover the costs of life's unexpected events that require an immediate action. It is to keep you stable so you don't struggle or get into debt.
When I was at Univerisity I ended up running out of money right when my rent was due. I was relying on my student loan to cover it, but that was late going into my account. I did not have a backup plan. I did not have any savings. Nothing. My only option was to beg the finance team to lend me the money to cover my rent, and as soon as I received my student loan I would pay them back. It was such an emotional and stressful situation to be in, especially when I was needing to focus on my course.
Now being a mother having an emergency fund is a major factor in our lives. We can never assume that everything is going to run smoothly throughout the year. We need to cover ourselves because when we need the money to fix or pay for emergencies, we need it there and then. Not tomorrow or next week.
You might think that putting in place an emergency fund is hard and unnecessary because you could use that money to go on holiday or for a deposit on a house. But think about how stressful, challenging and difficult it would be if you don't and something unexpected came up that you never thought would.
You don't have to put a lot of money back all at once, but some people work towards saving around 3 months worth of household bills, just in case they lose their job. If you aim to do this, then you need to first calculate how much your monthly expenses are to give you a clearer picture of how much you would need to set aside. Budget a portion of money each month to put aside in this emergency fund, and it will give you peace of mind when these events arise, and trust me they do.
I am very thankful that we have this in place because we have had a few things crop up in the past few months that needed us to act quickly. Now we are back on track and back to saving the money that we used.
Do you have an emergency fund?
Has something happened where you wished you had saved some money?
*This post first appeared on www.meetothermums.com*