How big should your emergency fund be?

What is an emergency fund?

Let's start with the basics. What is an emergency fund? An emergency is just that…money set aside for emergencies. I know…seems so simple, right?

Life happens. Someone gets sick. The car breaks down or needs new tires. Your roof leaks. Your washer finally bit the dust. Your hours at work get cut. You get the picture. So, what happens when one of those things happen? How are you going to pay the bill?

Do you have a plan in place? Are you going to grab your credit card, pay the bill and then just pay the monthly minimums (which then accrues all of that interest)? Borrow from a friend or your parents?

What if…stay with me here…you had saved money. Saved money for those emergencies in life. What if you had the CASH to:

• Pay that bill?
• Pay the rent or mortgage?
• Buy food for your family?
• Make the repair without thinking twice?
• NOT put the charge on your credit card?

Would that take the pressure off of well…everything?

I am a BIG time advocate for an emergency fund.

I have lived my life with plenty…and sometimes with nothing. When my husband did not receive a pay check for 15 months we were not stressed. We had the cash. We paid all of our essentials from our emergency fund.

So, how big should your emergency fund be?

First, lets start with what I consider an emergency:

• Car repair
• Medical bill
• Home repair that can't wait
• Appliance repair
• Paying your rent/mortgage
• Buying food for yourself and your family

Now, let's go to what an emergency fund is NOT:

• Flat screen TV on sale
• Manicure/pedicure/hair
• New clothes or shoes (Unless your baby has outgrown them)
• Vacation
• Home renovation
• Fancy food and snacks
• Kids activities
• Every single channel on your Direct TV package

Basically, an emergency fund is to only be used for essentials. Anything you can live without…is not an emergency.

I created a worksheet for you. It includes the how-to's, calculators and trackers. Go on and grab it!

How to calculate how much you need –

Simple math.

Make a list of your mandatory expenses:

• Rent/mortgage
• Utilities
• Food
• Insurance Payments
• Debt, Loans, credit cards, etc
• Insurance Premiums

And then make a list of your discretionary expenses:

• Food
• Pet care
• Car gas/Transportation expenses

Assign a $ amount to each. Add them up – that is what you need each month…in case of an emergency.

Multiple that $ amount by 6 months. That is what you have saved if you needed to pay your bills for 6 months. Once you get to your 6 months…tack on 3 more. With what is happening in the world today…9 months with limited or no income could be a high probability.

Yes, in order to save for an emergency fund you need to cut back on today's spending. Is it worth it? I am 100% positive it is. Ask anyone who has lost their job. How would having an emergency fund saved them from all the stress and trauma of not being able to pay their bills.

I have tons of posts about budgets and money. Check them out HERE.

Now, sometimes life can get pretty overwhelming, right?

And sometimes, when you are overwhelmed, stress sets in.

And when stress sets in it is sometimes difficult to be happy or joyful. So, please don’t let stress have the last word! 

Go on and take a look at the ‘Top 5 Stress Reducers’ (Action Plan included). So that you can eliminate what causes you stress and get on the path of living a joyful life.

What is Joyful Living all about?

Joyful Living is ALL about not letting let the circumstances of YOUR life determine who you really are. You learn to choose YOU instead! Not sure how to do that? Let me help! 

To begin, go ahead and read:

What is Joyful Living?

5 Simple Steps to Choosing Joy

Finding Joy in All Things

What Does God Say About Joy?

Difference Between Happiness and Joy