Emergency Fund: Your Guide To Safeguarding Your Money

Having an emergency Fund can be the difference that either makes or breaks your financial success.

Whether you are starting from a place of financial comfort or insecurity, an emergency fund is a must have for every household.

In today’s economy, it’s no surprise that most Americans are floundering under the pressure of inflation. Let’s be frank, its breaking the bank. But as someone seeking financial independence and financial freedom, you’re seeking a way to prevent inflation from stopping your meeting your financial goals.

Imagine this…

You just finished a hard day’s work and you’re on your way home when all of a sudden, a deer pops out in front of your car. It’s too close to stop in time, so you do the only thing you can do, you swerve and instead of hitting the deer, you smash into the guard rail on the side of the road. You’re ok, although a little shaken up.

 After taking a deep breath you get out of your car to assess the damage. As you walk around the front of your car it looks ok at first glance, and then in a couple more steps you see it…. your passenger side fender is completely smashed, with your headlight hanging on by a thread.

Thankfully you have insurance, but then you remember that a few months ago you chose the higher deductible in order to save a couple of dollars each month. Meaning you now must pay $1,000 to get your car repaired, not to mention the rental car to get around! Ugh, you budgeted down to your last few dollars, and it’s still 6 days until payday.

What on earth are you going to do?

You start combing through your wallet and pull out credit cards, considering your options. “I was just starting to get ahead,” you think to yourself.

Most Americans don’t have an emergency fund

If you’ve ever felt this dread or worry about how you are going to pay for an unexpected expense, you are not alone. 

Actually, in an article published by Bankrate.com, it was reported 63% of Americans are currently one unexpected situation away from going broke. 

And furthermore, Yahoo Finance states that 37% of Americans would not be able to cover a $400 expense if one came their way.

Does this sound like you?

Trust me when I say, I’ve been there plenty of times.

I was in a place where I was living paycheck to paycheck, just like the majority of Americans. Having to use my credit cards as a last resort whenever I had a large expense and then trying to make a pay-off plan only led to more struggle. And with credit card interest, I just kept going deeper and deeper into debt.

So trust me when I say, this is not how you want to live your life or manage your finances.

And I’m here to tell you….

Emergency Funds Create A Better Future

An emergency fund is the answer if you’re ready to escape this dangerous tightrope that borders on financial ruin or stagnation!  

What is an emergency fund?

An emergency fund is a designated amount of money that is exclusively to cover emergencies. Not the “I really need this dress for my sister’s wedding” kind of emergency…

Or the “I don’t feel like cooking, let’s go out” kind.

But rather, the “I’ve blown a tire and don’t want to put it on credit kind of emergency. Or possibly, “I have to go see my sick grandmother in the hospital in Nebraska”, kind of emergency.

Those are true emergencies that would constitute pulling money out of this special fund.

Now you might be wondering…

How much should I have in my emergency fund?

To truly answer that, I must first explain that there are 3 types of emergency funds.

1. Starter Emergency Fund – this is the type of fund you want to establish while you are in the process of paying off debt, or maybe if you do not have a lot of income to spare as you save. Start with a goal of saving $500-$1,000 to create a cushion in your bank.
2. 3-6 months Emergency Fund – This specific type is for all types of emergencies but aims to cover you in the event of a significant financial hardship such as a loss of your job, serious disability, or forced relocation.
3. Fully Funded Emergency Fund – A fully funded emergency fund has 12 – 18 months’ worth of expenses covered.  This would protect you in the event of multiple financial disasters, hardships, or long-term disability.

Ultimately, the type of emergency fund you need depends on where you are right now with your finances.

If you are currently living paycheck to paycheck or spending 90% or more on expenses, I would recommend you focus on increasing your income (if possible) and building your starter emergency fund.

If you are living more comfortably and have 10-30% of your income left over each month, then you want to aim towards the 3–6-month mark or more.

Where should I keep my emergency fund?

When you understand how much you need to have in your emergency fund, the next question becomes, “where should I keep my emergency fund?”

Ideally, you want to keep your emergency fund in a safe place other than your checking account. Depending on the amount of money in your savings account, you could open up a regular savings account at your local bank. Or for larger emergency funds (i.e., fully funded emergency fund), you could put it in a high-yield (or high-interest) savings account to maximize your money.

Either way, setting your emergency fund in a safe, quickly accessible, and profitable location will be your best bet.

Why Do I Need An Emergency Fund?

If the first scenario, or your own personal experience isn’t enough to convince you that you need an emergency fund. Maybe this will.

You might not know me or my story (read my about me) – I am a widow and mother to 3 beautiful children. My husband passed away in May of 2022 while I was 5 ½ months pregnant and we were in dire financial straits. We had very little money left over each month and no idea how we were going to pay for our coming little boy.

One evening I sat down to create a plan for us. I crunched numbers for hours and finally figured out how to make it work.

Excitedly, I went to my husband and showed him my hard work and assured him that we would be okay.

Tragically, my husband passed away a few short months later. This left me feeling even more stressed and hopeless than I had before.

Even in the darkest days, there is hope

So again, I did the only thing I could do, I crunched the numbers. And with a sign of relief, I realized that I could make it.

I WOULD make it.

Just under a year later (11 months to be exact), my position was eliminated at the company that I had worked at for nearly 8 years.

But praise God, He had set a plan in motion for me months before and I had built up my 6-month emergency fund. So, I was able to breathe a sigh of relief that I had a safety net to ensure I didn’t lose my home, my car, or anything else of value.

Not only did it secure the only home my children have ever known, it also gave me the freedom to figure out my next move.

What if I don’t have extra money to put into my emergency fund?

When you’re looking at an emergency fund, it can seem like a daunting task to save extra money, especially if you don’t have much extra.

Using simple saving strategies such as an automatic weekly transfer from your checking to savings account can add up fairly quickly.

Consider swapping out your daily coffee trip to Starbucks for homebrewed, and over the course of a year, you could easily save $1,200 without even thinking about it.

Take a moment to login to your online banking app and see where you may be spending a little extra, and divert those funds to your emergency fund.

Having An Emergency Fund Brings Relief

Once you have your emergency fund of at least $1,000, you rest a little easier. Trust me, it feels great knowing you don’t have to rely on debt. You can take a moment, regroup, and think things through, knowing that you are protected.

With that security in place, you can consider other ways to safeguard your finances. Like having AND USING a written budget, tracking your expenses/spending, and increasing your income.

Ultimately, the most important thing is for you to have a financial plan that works for you, and make sure that plan includes saving.

It’s Important to Trust God

As a believer, it is important to keep God at the center of every decision we make, including our financial decisions.

If you too, want to keep God at the center, I encourage you to learn more about what the bible says about your finances by checking out the 30-Day Money Makeover for Christian Women.

Safeguard Your Finances

I want to invite you to take the next empowering step towards financial abundance. By incorporating the timeless wisdom of Proverbs into our financial decisions, we can experience true financial freedom and align our finances with God’s Word. The 30-Day Money Makeover for Christian Women is designed to equip you with the tools, knowledge, and support you need to safeguard your finances, create a solid financial plan, and unlock a life of abundance.

Don’t let financial uncertainty hold you back any longer. Join us on this remarkable journey and discover how to manage your money wisely, increase your income, and achieve lasting financial security. Gain the confidence to make informed financial decisions, overcome debt, and build a solid foundation for your future.

Enrolling in the 30-Day Money Makeover for Christian Women means you won’t have to navigate this path alone. You’ll be part of a supportive community of like-minded individuals, all striving to align their finances with God’s Word. Together, we’ll explore practical strategies, dive deep into biblical principles, and experience the joy that comes from being good stewards of our resources.

So, are you ready to embrace financial freedom, honor God with your wealth, and create a legacy of abundance for generations to come? Take the first empowering step today and enroll in the 30-Day Money Makeover for Christian Women. Your financial transformation awaits. Let’s embark on this incredible journey together!

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