Often I talk about the importance of an emergency fund in a healthy financial plan. However, recent stats show that most American do not have an adequate three to six months worth of expenses saved up. A careerbuilder.com survey found that as many as 3/4th of Americans are living paycheck to paycheck with no margin in their financial life. Not having an Emergency Fund might not sound like a big deal, but from personal experience I can vouch for the benefit of having one.
Last fall, my wife and I had some unique financial situations come up on us back to back. First my wife was involved in an auto accident during a rain storm. Fortunately she was all right, but the car was not. It needed a new back bumper in addition to some new tires. A little over a week later, our electric garage door stopped due to a spring breaking and we had to call someone to get it replaced. The combined cost to us was about $900 for the deductible, new tires, and new garage door. Thankfully, we had our emergency fund and were able to pay those expenses without missing a beat.
I tell this story because if we did not have the emergency fund we would have had to scramble to find out how we would make our next mortgage payment or instead finance those purchases on a credit card which would have gotten us into more trouble financially. Fortunately, by having the emergency fund we turned a potential crisis into an inconvenience. In addition, we have had similar incidents of dipping into our emergency fund to cover unique situations and each time we have been able to sleep at night knowing it will not wreck us financially. So if you do not have an emergency fund for your family, make it a priority today! Do not be normal, be prepared for emergencies and turn your next financial crisis into an inconvenience.
Have you benefited from having an emergency fund? How have you leaned on it during tough financial times? I would love to hear your stories, so leave your comments below.