Budget Tips, Money

The Ultimate Guide to Emergency Funds

Pretty much everyone knows that they need an "emergency fund," but where do you even start? Here is the what, where, how much, and how to emergency savings!

When I first started paying off debt, I didn’t want an emergency fund. I wanted to jump straight into paying off debt instead! “Emergencies never happen to me, so why do I need one.”  That mindset is totally wrong, because as soon as you don’t have your emergency fund, you will need it. I am so thankful that I have maintained my savings throughout the journey because I know that I would have needed it. Having a little rainy day fund can be the most important part of getting started on changing your finances for the better. It can also give you a sense of security when your checking account is looking a little low from a large debt payment. In fact, having an emergency fund was one of the biggest things that I credit with allowing me to pay off $15,000 in 2017. At that point in my journey, I was only making about $35,000 a year, but still managed to knock out $15,000 in car payments and student loans.. Let’s start with the very basics. I will caution you with this, if you share finances with someone, this is a topic that both of you should figure out before making any long term financial decisions. What is an Emergency Fund? An emergency fund is really exactly what it sounds like. Extra savings put aside in case of an emergency. Before you start throwing excess money at your debt, it is a great idea to have money in savings to work as a buffer in case something were to happen. If you are following Dave Ramsey’s Plan, he recommends starting with a “baby emergency fund” and then moving into a “fully funded emergency fund” once you have paid off all of your debts. Whether you are following Mr. Ramsey or not, having a little money set aside, just in case is an important step no matter what you are planning to do after that! What is Included as an “Emergency?” This is totally up to you (and your partner if you share a budget with someone else.) Things that…

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