Building Your Emergency Fund Your Way

In this post I want to talk about something that I think is really important to have, especially if you are a one income family or if one of the income earners are self employed, and that’s an emergency fund.

Emergency funds have been talked about a lot, especially by some of the big money gurus, and you may be really tired of hearing about needing one or just don’t believe that you can spare enough cash to build one of your own. Trust me though, you do need one. And with a little extra effort/sacrifice you can have one soon.

A lot of people say your basic emergency fund should be $1,000 and then you should concentrate on paying off your debt. That’s a great number in theory, but it didn’t work out well for us. This is why I say to take advice from the big money gurus, but you are the only one that knows your financial situation front and back, and you have to make a plan that works for you. 

When I first started trying to get our finances under control we were in bad shape. We had bitten off way more than we could chew and didn’t have the income to fix it. We struggled, but were surviving, and I was doing everything I could to find ways to bring in extra money. 

I started reading Dave Ramsey’s “Total Money Makeover” and it helped motivate me that things could get better. My husband didn’t like the idea and I just couldn’t get him on board at all. That didn’t stop me though, I went ahead and started following the plan and every extra dollar I had went into that baby emergency fund. 

It took longer than I wanted but I finally reached that $1,000 goal. I was so excited but within a month our car and our lawn mower needed repairs and because both were must haves it wiped out the emergency fund.

So I started all over but this time my base emergency fund goal was higher. I started having yard sales, thankfully my eBay store was taking off, and then we received our tax refund. So with all of that I was able to reach my goal of a 3 month emergency fund. 

Now I have to tell you that hitting that goal felt great! It felt even better when the next emergency popped up and it didn’t bust the bank. After getting our emergency fund to that point I pulled back from saving, pulled back being the keywords there. 

The financial gurus will say to focus on paying off all debt, but again I knew that wasn’t going to work for us. I did make a “debt snowball” of sorts, but while I was paying down the debt, I was still putting back a small amount for savings. By the time paid off the debt we had added another 3 months to our emergency fund.

Any extra money we would get would go to both debt repayment and savings. It wasn’t easy and it took a little longer to become debt free for us but we did it and it was so worth it.

The next goal after becoming debt free was to have one year of living expenses in the bank, and I’m not going to lie and tell you I threw all our money towards that goal because I didn’t. We needed to do some remodeling and there were some other things we wanted to splurge on so we did.

But I felt free to do those things because I knew I had at least 6 months of living expenses in the bank if something went wrong. The peace of mind I received from that 6 month fund made me glad that I hadn’t just followed the recipe the gurus laid out, but I had tweaked it to fit my situation.

So basically, this post was meant to convince you of two things… that you need an emergency fund, but how you get there and how much you put back is up to you. Everyone’s situation is different, and so as long as the end goal is an emergency fund, you’re doing everything right.

Good luck saving!