Sometimes owning a home or a vehicle can cause you problems....and money. Something unexpected happens and suddenly, you have to spend money that you weren't planning on. In our case, carpenter ants have decided to move into our home and yesterday my husband's car died. So now, we have to spend money to get rid of the ants (anybody want them?) and to fix the car.
It is for times like this that you want to have money saved in the bank. This is so that, in case of a situation like a job layoff, a home or car repair, etc., you will have some money to fall back on. Then you won't have to go into debt (or get further in debt) by putting it on a credit card.
To do this, you'll need to decide how much money you want to save in the event of an emergency, and you begin saving for it. The thing that scares alot of people about saving for an emergency fund is the amount. Years ago I read somewhere that you should have at least a month's salary saved up. Some people recommend three to six months.
For many people, the thought of saving even one month's salary is a daunting task. Not to mention six months.
I don't think I have never read Dave Ramsey's books but I keep hearing about him. I heard somewhere that he recommends having $1000 for an emergency fund, which I think is a great idea. Even saving up for that amount can be difficult for many people. When you're pretty much living paycheck to paycheck, how do you come up with extra money?
Also, it's so much easier to spend money on something when it is staring you in the face. It's alot harder to save for an "emergency" that hasn't happened yet. You like to hope that maybe there just won't be one! After all, it will never happen to you, right?
Many times there are things that can be cut out of the budget in order to save money, but it hurts! Give even the faintest whisper that someone should give up their daily Starbucks or diet Pepsi (gasp) and you may find yourself in an argument. Suggest that someone drop cable, cell phones, the internet, or the newspaper in order to save money and you may have a problem on your hands.
Dare to even suggest that someone give up their extra car to save money and you may find yourself alone in a room, talking to yourself. Suggest that someone scale down their home and buy a smaller one in order to have smaller payments to save money and it's on....
Do I need my own car? Well, no, I don't (don't tell my husband I said that). It's not like there aren't buses around. I could drive my husband to work if I needed a car that day. It is just that it's convenient to have my own car. Many of us don't even question owning two cars. I need one because it is convenient to have one. It would make my life more difficult not to have my own car.
Are you wishing you could start an emergency fund but wonder how you could afford to do it? Why not take a little notebook and write down everything you spend money on for the next few weeks. Everything. No matter how small. That will let you know where your money is going.
Ask yourself, "If there was a serious need in my family and we needed money right away, what could I cut out of our budget? What could I live without, no matter how inconvenient? What changes could we make in our spending habits?" If the budget cannot be adjusted ask if perhaps there might be a way to generate some more income. When you find your answers then maybe you'll find the beginning of your emergency fund.