Wednesday, January 20, 2010
Do you have an emergency fund?
So, do you have an emergency fund? And, just what is an emergency?
Until very recently, we were among those in the world without an emergency fund. Although our fund is not fully funded (meaning 6 months income saved for our family) as of today, we are now well on our way compared to this time last year. Don't get me wrong, there's still a long way to go, or so it seems.
An emergency fund is just what the name says - funds (money) to be used in an emergency. So, let's define an emergency. An emergency is a situation that needs immediate attention. What constitutes an emergency for our family might not be an emergency for your family.
An example of an emergency for our family is when the electricity has been off for a 24 hour period. After 24 hours with no electricity, the battery to our daughter's pulse ox machine (the one that monitors her heart rate and oxygen saturation) has died. This is the machine that lets us know during the night if her trach has plugged and she's unable to breathe. So, if our electricity stays off for more than 24 hours, we must leave home and go to a place that has electricity. If this were to happen, our emergency fund could pay for the hotel room in the event there wasn't enough available money elsewhere in our budget to cover it.
Another example would be if my husband lost his job. After losing his job, our monthly budget would last a little more than a month (if used creatively) and then if there was still no income or only a part time income, we'd have to use the emergency fund to pay our bills.
Notice I didn't say we'd use it to eat out, buy new clothes or for any kind of entertainment. It would be used to pay bills and all non-essentials would be put on hold until he got another job.
So, do you have an emergency fund? If not, go here to learn more about it.