Doesn’t it seem much more important to have an emergency fund now that people are talking about the US going into recession? Something that’s often neglected as a benefit of having an emergency fund is actually the piece of mind of knowing that our standard of living won’t be jeopardized if we lose our jobs.
Having an emergency fund will also give us freedom to look for another job if we unfortunately get fired. Imagine someone who lives paycheck to paycheck getting fired. How will he or she keep up? It wouldn’t matter what the former lifestyle is because there is no way he/she can pay another bill. This means that the person is forced to find a job immediately and the chances of finding a good one diminishes drastically.
Some might feel that emergency funds are not important because they’ve never used it. Actually, the fund is never meant to be used. It is just a safeguard just in case something happens and cash is needed quickly. The fact that the fund has never been withdrawn shows how lucky the person is because they never needed that cash.
With a stock market that seems to go lower daily, the emergency fund also acts as a form of diversification of our assets because emergency funds are supposed to be kept in safe investments like money market funds or even online saving accounts. Actually, I bet many people wishes much more of their assets are in their online savings account instead of being in the stock market!
So how many of us actually have emergency funds already? If not, what are you waiting for? There’s no perfect moment to start so now is a better time than any!
Promote or Save This Article
If you like this article, please consider bookmarking or helping us promote it!
Print Post | Email Post | Del.icio.us | Stumble it! | Reddit |
Related Posts
- 6 Neat Ways to Build Your Emergency Fund
- Don’t Forget Your Own Finances this Sunday
- Automatic Millionaire – Automate for a rainy day
- How I Look at My Money in Big Picture Fashion
- What to Do When We See a High Employment Rate
Subscribe! (and Get a Mini-Course with Free Registration)
Follow me on twitter! In addition, subscribe to grab free amazing content or take advantage of the newsletter to have content delivered to you. For starters, a 7-part mini course to help you spend less and be happy will be delivered to you when you subscribe!(Don't worry about spam, because we hate it as much as you do!)
{ 15 comments… read them below or add one }
I don’t believe the US is actually going into a recession. I think it is the best time to get into stocks because after a new president gets power, the economy will look good.
Big emergency fund fan over here. Haven’t used it yet, but it certainly helps me sleep at night.
Can’t be much of a recession when people are paying hundreds of $$$ to go to “Hannah Montona”
concerts, movies are still raking in big dollars and the malls are always full.
Got the emergency fund…and have used it twice in the past year! The beauty of getting out of debt, is last month when the car broke down, I didn’t have to use the emergency fund – we had enough wiggle room in our budget to cash flow $509 to simply fix the car! But knowing it’s there: now that is true peace of mind.
I agree, this is very important. Prime lending rates have been dropped, which sounds good but actually means lenders will be more tight-fisted with their money because they can’t earn as much from it. Housing starts have just nearly come to a standstill in our area. Construction companies are finishing current projects, but aren’t making plans for more new ones.
Hannah Montana is a diversion and nothing more. People feel the need for diversion for a brief period time when the economy is sinking. But Hannah Montana doesn’t make or break the economy. It’s a drop in the bucket overall.
More on topic, I’m afraid to say I don’t have an emergency fund. It’s hard for a widow with one income to do much more than just pay bills and keep the wolf away from the door. Those who can do this really should, though, and I hope to set aside at least a few dollars at a time for future needs.
Great post on emergency fund – the reason is freedom!
I have had about $100,000 in my emergency fund since I am self -employed. I used about $9,000 last year for medical care, since I have catastrophic health insurance. The next big payout will be paying cash for a new car, although I hope I won’t need to for a few years and will be able to get to 200,000 miles on my Sentra.
I’ve been able to stay self -employed for 18 years because of the find.
I meant “fund.”
Ronald: I hope you are right. It’s a tough market to make money if you are long right now but hopefully things will turn around soon.
plonkee: It’s great that you already have this in place because so many people don’t!
Brian: Actually, I’ve been to the mall this month and it was pretty empty. In previous years, I have seen much more people inside so maybe it’s a different situation depending on where you are located.
Debt Free Revolution: It’s always great to hear people having free cash flow to cover emergencies. Hopefully you won’t have to use your emergency fund in 2008 at all!
Ann: You really should try to set aside anything you possibility can for the rainy days since you never know what would happen. Just remember that every dollar counts!
Maybe there are things you are using/doing that you can cut down a little bit on to save some money? A few dollars here and there goes a long ways since they add up.
Marc Woolf: Thank you. I hope that you have an emergency fund already setup or will start one because of this article!!
wamylove: Wow that’s a pretty big emergency fund!! I hope that you have it put into a high yield savings account because that’s a lot of interest money missing if all of it is in a checking account.
I’m glad that you were able to cover your medical care expense last year. Maybe you should look into getting a better health insurance this year if you haven’t done so!
Btw, 200,000 miles is no easy feat for any car so good luck with that
Too late now that I have a record of having problems. However, my premiums are only $179/month and I’m 52. BCBS have been great and their reductions have saved me over $20,000 in medical fees this year. Having everything go wrong at once allows me some reduction in my taxes, at least. I didn’t even have a Dr before last year.
Most of the money is not in a checking account….
I have over 158,000 on the car now and the mechanic thinks it’ll make it..
wamylove: I sense that you’ve looked past your set back which is great! 158,000 is no easy feat and I hope that you can past 200,000 handily
You are absolutely right. Everyone has to have an emergency fund. Really, it is very helpful. Actually, i was unaware that this emergency fund also include help when we are fired from our job. thanks for this information.
I thought I had an emergency fund and then I heard about wamylove’s emergency fund. Now wamylove should sing the title of this article to a certain tune: “Don’t you wish your e-fund was hot like mine.”
I LOVE my emergency fund. It helps me sleep well at night.
Even though I haven’t fully funded it, I did have to tap it last week for a new washing machine and, while I felt a twinge of pain, it made me feel good when I thought back 3 years ago to how I would have racked up $400 in credit card debt and hoped to pay it down in 6-9 months time.
I have to say though that when the market was going gang-busters it was a nice feeling to know stocks were too expensive and I’d be better off socking away money in the emergency account. Now that it’s in the doldrums, and they’re having a big after Christmas sale on stocks, it makes me wish I had some extra cash to put into the market. Oh well… I’ll have to wait for the next sale.
-=[OMF]=-