Shit Happens.

I went to get a loose crown checked out at the dentist this week.  It quickly turned into a $250 tooth extraction and sheer panic over the $1800 dental implant I would need to replace it.  Shit happens.  And when shit happens, you need to have an emergency fund in place to cover the cost.

An emergency fund is an easily accessible stash of money for “shit that happens”- or emergencies.  It’s NOT for taking a vacation or buying ANOTHER new phone.   It’s the money you live off of when you’ve been laid off unexpectedly, the money you use to fix the leak in your roof, the money for your medical bills when your teeth, your bones, or God forbid your heart give out on you.

The sad reality is that something unexpected and expensive is going to happen.  You are not immune.  So if you’re thinking, “I can’t afford to have an emergency fund”, start thinking, “I can’t afford not to”. It’s been shown that those who don’t have emergency funds are more likely to amass debt.  Start saving now before you find yourself in a hole you can never get out of.

Experts recommend setting aside anywhere from $1,000 to 9 months worth of living expenses for your emergency fund.  The suggestion that I would have an extra 9 months of living expenses just lying around is laughable to me as it probably is to all the broke and beautiful; so let me offer my suggestion.

Open a high yield savings account with an initial deposit of $1,000 to start.  If you don’t have $1,000, make it happen.  Look back at the post “What Do You Have To Offer?” for some ideas.  Now in my opinion $1,000 isn’t going to get you very far in an emergency, so once you’ve made the initial deposit, contribute weekly, bi weekly, or monthly to your emergency fund until you’ve built a nice cushion.

I have about three months of living expenses saved up.  In an ideal world, I’d have six.  After getting my teeth fixed, I’ll probably have one.  Time to prioritize the emergency fund.   I recommend your emergency fund contributions being your top priority after basic needs like housing, food, and transportation until you hit the three to six months of expenses mark.

If you have trouble saving, set up direct deposit to your emergency account.  If you like to spend impulsively, don’t get a card attached to the account.  While your emergency money needs to be accessible (not tied up in a retirement account or risked in investments), you don’t want it to be so readily available that you blow it all on the new iphone with one swipe of a credit card.

Now start saving- and be safe.  Shit will happen, but at least you’ll be prepared.