If there’s one thing I’ve learned in this life it’s that things don’t always go according to plan. In fact, things almost never go according to plan!
Just when you think everything is going your way and you’re on target to reach your goals something comes along and throws a monkey wrench in your plans.
You get a speeding ticket on your way to work, and then your car breaks down on your way home. You get home from vacation and find a pipe burst and your kitchen is flooded. The town reassesses property values and your taxes go through the roof. Your daughter falls off the swings at the park and you’re hit with a hefty emergency room bill. Your refrigerator suddenly dies and everything in it spoils. Your boss calls you into his office and informs you they’re sending your job to India.
I could go on and on listing all sorts of tragedies and unexpected expenses that could come up at any time, but I think you get my point. The fact is that these types of expenses happen to everyone sooner or later and there’s no way to stop them from happening. The best thing you can do is to anticipate and plan for them ahead of time.
Part of being prepared means having a well-funded emergency fund. If you find yourself hit with an expensive car repair or a leaky roof that needs to be replaced, you’ll be glad you have some extra money laying on the side. If you don’t have an emergency fund set aside for unexpected expenses that pop up from time to time you’ll end up paying all those bills with credit cards. It could take years to pay it all off and you’ll end up paying a small fortune in finance charges.
You’ll want to keep your emergency somewhere safe and easily accessible so you can get to it when you need it. Personally, I like to keep the bulk of mine in an online savings account where it will earn a little interest over time. I can easily transfer it to another account and write a check or withdraw with my ATM card.
I also keep a small amount of cash on hand at all times. That’s a lesson I learned after Hurricane Sandy hit the Jersey Shore and knocked out power for my entire county. ATM cards were useless without power to bank machines, and the few businesses that were open were on generator power and their computers weren’t working…so credit cards were also useless. Thankfully I had a small stash of cash tucked away and it helped us get by until things returned to normal.
Of course, an emergency fund can include more than just money. Having a well-stocked pantry full of dry goods that won’t spoil will help you through power outages or snow storms that prevent you from getting to the store. It’s also a good idea to keep plenty of candles, flash lights, and batteries on hand.