The title says it all, you will find ways to build an emergency fund. Recently, I have lost my keys to my apartment. Of course the building manager was off and I needed to be at work the next morning. I flew back the night before around midnight and saw I didn’t have the keys.
Now what? Call friends and ask if I could stay the night, call a locksmith and notify my boss I have a high chance of being late in the morning.
Thankfully, everything worked out, but what if I didn’t have the funds for the locksmith? I would have put it on a credit card and become more in debt. Funny, I do not have one. I would have been screwed.
This is why saving for emergencies is crucial. I have been taught to put at least $1,000 aside for emergencies and as I became more stable, put aside about 4 months of living expenses in the emergency fund.
I have received my financial advise from my mom and Dave Ramsey. As a college student, I receive a lump sum of money at the beginning of each semester to be applied to my cost of attendance at school. For students, we can easily take $1,000 from that refund and set it aside in a bank account.
At different banks people can set up a savings account, vacation account, holiday account and a checking account. I personally have 1 holiday account and multiple vacation accounts. I label each account either as rent/internet, emergency, vacation and my traditional savings account is labeled savings account. So during emergencies I can transfer money from emergency to checking account and have no worries about my finances.
For those who do not receive financial aid refund checks, there is a way to put aside $1,000. When I didn’t receive refund checks I put aside a certain amount from my paychecks. This is decided based on the monthly living expenses. Some live on a 80/10/10 lifestyle. You live off of 80% of your income, give 10% of your income, and save the other 10%. This allows you to live comfortably, while saving for emergencies.
Since an emergency can come at any moment, it’s highly advised to be aggressive with saving that $1,000 ASAP. This fund will relieve you of so much stress of paying for a locksmith, urgent car and house repairs, etc.
Earlier in this post I mentioned a holiday account. If you want to learn how I save for holiday shopping click here.
Quote of the Day: “Collect your food during the good years and store it. This food will be used during the famine, so that the country will not be ruined by famine.”