Studies show that the majority of American households don’t have enough money in their rainy day fund to cover an unexpected expense.
It’s a fact of life. Emergencies pop up, things break and life costs more than you think it should. That’s why it’s important to be prepared. You can’t prepare for every possible emergency but stashing away a few dollars every paycheck can help.
Some expenses are truly unforeseen like a car accident, death or health problem. However, there are some that you may see coming. It’s a good idea to look around your home and consider the state of your possessions. Is your furnace starting to make a noise? Are the tires on your car showing their age? How old is that refrigerator anyway?
These things are all expensive to replace or repair but are imperative to have. You can’t survive the winter without heat in your home. You require some way to keep your food cold or frozen so you have to act quickly when the fridge dies.
Make a list or at least a mental note of what could go wrong and add up the costs. The total will probably scare you but might provide some tangible reasons to start saving for emergencies.
Now stop and think about how much you can save each paycheck or each month. If you can stash $100 a month, you would have $1,200 saved in a year. Can’t save that much? That bonus at work or tax refund could go a long way toward padding your emergency fund and securing your budget in a crisis. Put away what you can and try to remember that this money shouldn’t be touched for anything less than an emergency.
Just a reminder: a Passbook Savings account at VCNB is a convenient place to save. If you have a checking account as well, it’s easy to transfer funds between accounts or even automate your savings with automatic transfers from your checking to savings.
If you have to take from your emergency fund, be sure to replace the money as soon as you can and continue building that safety net for future problems.
Want to read more about the reasons you need an emergency fund? Click here.