A lack of having an emergency fund can make or break fools. Being a single-time fool comes with a fair share of consequences. But being a double-time fool, you’re just asking for trouble. Try being a viguple-time fool like me. Now that’s a badge of honor! Yes, that’s a real ‘tuple’ word. And each time it happened, I vowed to never do it again hah!
You have a financial website, aren’t you required to have an EF before you start a blog? Alright you got me. Technically everyone should have an emergency fund or savings account or just cash reserves, they should serve the same purpose. Be available to use but hope it never does. Let me say that I did have an emergency fund during each situation. I just never refilled the tank fully. We’ve been a single income family since 2016 which ironically started the downward spiral. But this is 2020 baby! Times are different for us. We are in a much better position to attack pretty much all of our EF goals.
- Save $1,000 in a savings account
- Sock away at least 3 months worth of expenses + 10% buffer (approx. $5,400)
- Contribute $200 bi-weekly
- Build the fund up to 6 months of expenses + 10% buffer (approx. $10,800)
- Continue contributing $200 bi-weekly until it reaches $1M
Considering the average person only has $400 for emergencies, I’d say we’re pretty good with our $2,400. But who wants to be pretty good? That’s why we’re beefing up the savings in the coming months along with paying down our debts.
With a 6 month cash reserve in the bank, let’s imagine what Mr. Simple FI will be experiencing 12 months from now:
- Long, restful nights of sleep in the midst of financial chaotic mayhem
- Peace of mind knowing my little financial soldiers are calmly stored away
- Making big money move$
- Sipping a nice cold celebratory beer
- Dreaming of reaching that $1M EF (one can dream right?)
In one year, these will all be checked off the Simple FI list. Then on to financially bigger and better objectives.
How much do you have saved in your emergency fund? Is that enough for you to sleep like a baby at night?