Everyone Needs an Emergency Fund

Murphy’s Law – Anything that can go wrong will go wrong.

I’m the spouse of a retired Service member, and while I miss many things about military life, I don’t miss the uncertainty. I like to think through every possibility and make plans, but I’m convinced that Murphy’s Law pops up just to keep me on my toes.

Here are just a few examples that came from six military moves:

• A washing machine replacement three days into an extended TDY
• Our primary car breaks down as soon as we arrive at our new duty station…mechanic anyone?
• The nightmare PCS when we bought a picnic table and sleeping bags because our stuff was delayed for weeks. We still have that old table!

I’ll share one more example that I’m sure many will relate to. Like many military families, we live far away from family. Recently, we purchased plane tickets to visit an ill family member. Knowing we had cash on hand to cover the cost gave me peace of mind and allowed me to focus on getting where we needed to go and being there for our loved ones.

One thing that helped tremendously in all these circumstances was having money on hand. Our “rainy day” fund saved the day on more than a few occasions.

Here are a few emergency fund basics to provide you and your family with a little peace of mind.

• Don’t wait to save. Financial emergencies happen to everyone. Prepare for the unexpected now rather than later when you’re worried and stressed about the emergency and the potential financial hit. Avoid using credit to cover emergency expenses as interest charges can add up quickly and increase your financial stress. Even if you’re focused on paying off debt, strive to also set money aside for emergencies.
• Start by saving $1,000 in a separate, easily accessible account. A savings or insured money market account are good options. Here are a few great ways to quickly save $1,000.
• Set aside three to six months’ worth of living expenses. To determine your living expenses, review banking and credit card statements from the past month and identify spending on essentials like housing, food, debt payments, insurance, taxes, transportation, and child care costs. Use this calculator to find your target number.
• Follow a budget. One of the most empowering things in my life is keeping a budget. As our goals, income, expenses, and needs change, so does the budget. Find the method that works for you (app, spreadsheet, or notebook) and stick with it. Make saving toward your emergency fund a line item in your budget and consider establishing an automatic transfer.
• Use it for emergencies only and replenish it as soon as possible. I remind myself that a night out with my besties is not an emergency. Future me will be thankful to have money available the next time we need to replace an appliance or cover urgent travel costs.

The value of an emergency fund goes beyond the dollars and cents in an account. It’s being able to say “yes” when tough times happen; it’s making sure my kids have a place to sleep when the furniture doesn’t show up; it’s being there when my family needs me; it’s being prepared for life when Murphy’s Law strikes.

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