Setting Aside Money For Emergencies

Life never seems to be fair and bad things will happen, it is just a matter of time. When these things happen they can be expensive and if you don't have an emergency fund you can find yourself desperate for help with few places to turn. To solve this problem it is a good idea to have an emergency fund so that when you need some money to fix the car, pay for a dentist, or call a plumber for the major leak that has water filling your bathroom you can do so without issue. Setting aside money for emergencies is important, but not always easy.

Why Should I Have An Emergency Fund?
Life happens. That is often the simplest answer for why you should have an emergency fund. Sometime, somewhere you are going to need money to meet your emergency needs and the best thing is to have money to lean back on at this time. Sure there are other options. You may have cash in a different savings account, you may have a few credit cards, and there are always emergency loan programs out there. But when push comes to shove, having money ready for the times you need it is really going to be the best bet. It will allow you to turn there, you won't ever have to worry about it costing you interest (in fact, your money should make interest while you are saving), and you won't have to scramble to get the money when you need it. The car dies, the pipes leak, or you have a medical expense not covered my insurance, all you have to do is turn to your emergency fund and take out what you need. You should have an emergency fund because life happens.

How Much Should I Set Aside?
Most money experts recommend that you have at least 3 to 6 months worth of your salary set aside. This is often a significant sum which makes it worth having and makes it something that can really help during times of emergencies. The more money you have in your emergency fund the better off you will be when those really big and bad emergencies come up.

Getting Started.
Most of us don't have 3 to 6 months worth of salary lying around and if we did we wouldn't need an emergency fund. So, starting slow is often the best option. This can mean different things for different people. The best way to go is to figure out how much you can afford to set aside each month and do that. It might only be $20, or you might be able to come up with a $100 each month. Whatever it is, start here. Make sure this amount goes into savings each and every month until you have a significant amount that is at least three months worth of you salary. Lets say you can't afford $20 a month, don't let that be an excuse not to put money in the savings account. Save $10 a month. It is just important to get in the habit of saving. The more money you save and the more often you get in the habit of saving the more likely you are to save more money. You can also collect your change and odd dollar bills in a jar and deposit these into your savings account ever couple of months. Don't have any excuses and most of all don't use the excuse that you can't save money because you don't have any to save.

As with many things, six months is better than three. This will give you more money to work with and you are less likely to deplete it all with one big emergency. If you keep on saving you can eventually make it to this large sum. Then you will be ready for whatever comes your way and you won't have to worry about when life will strike next.

Be willing to make sacrifices to get your emergency fund up and running. Most of us spend a lot of money on things that we don't have to have. Maybe your vise is a coffee that you get a few times a week, or a new pair of shoes. Whatever it is that you spend money on that you really don't need, consider cutting back. I am not saying that you have to give up all the luxuries you have in life, but be willing to give up a few. One less coffee could mean as much as $5 more a month you could save. Over time, this can really add up!

Using Your Emergency Fund.
Your emergency fund is there for when you really need it. You should pull money out for the emergencies that life often brings up. It is a good idea to define an emergency as something that has to get done. It is hard to justify some things that some people consider emergencies. After all, eating out, new clothes, or new technology aren't good reasons to pull money out of the emergency fund. It is also a bad idea to use this as a rainy day fund and go some where nice or do something fun when you feel the need to get out. On the other hand, it is a good idea to pull money out to fix the car or house, to take care of medical emergencies, and other things that really have to get done and taken care of.

Keeping It Up.
As you take money out of your emergency fund you will need to replace it. There are two ways to do this. The first is to never stop pumping money into your emergency fund. This way you are always working on storing up, whether you can give your account a few dollars or a nice monthly boost. The other option is to fill it up with at least three months salary and then let it sit. Use it as needed and when you take money out of it you start putting money back in until it is once again full up.

Having an emergency fund is the best way to live life and survive those horrible emergencies. Often people have to turn to pay day loans and car title loans to meet their needs. These are expensive ways to go and these types of loans can be extremely hard to pay off. If you have an account set up to meet your needs when life happens (and it will happen) then you won't have to come up with difficult and undesirable alternatives.