Written by Netisha Alie-Grant
(Author of Inspirational Book: Walking a Two-Way Street-Examining the both Sides of the Story Before Making a Decision)
What is an emergency fund?
“An emergency fund is a bank account with money set aside to pay for large, unexpected expenses, such as:
- Unforeseen medical expenses.
- Home-appliance repair or replacement.
- Major car fixes.
- Unemployment.” _ Margarette Burnette
This fund can be kept in a savings account with high interest rates and easy access since it is exactly what it’s called: Emergency fund. You want to be able to access it whenever an emergency rises without hassle.
What it is not:
Your emergency fund is a type of savings with the focus on emergencies.
A savings is where you keep money for a particular goal which can be short term: for house, car, or a trip, shopping spree.
Or savings for long term plan would include retirement, college funds…
How much should its be?
I once asked an accountant friend of mine for a suggested amount for an emergency fund and she said at least (6) six months worth your living expenses. This you can know by tracking your spending for at least a month or two to figure out the average cost per month the. Multiply that amount by (6) six. (I have podcast episode on that.)
The concept of the Emergency fund can be seen in the parable of the (5) five wise virgins. They had the equivalent/enough of the cost of their journey, making them always prepared and prepared for a longer time than this who did have extra oil.
This doesn’t have to be just for money. When you do groceries for example, buy some supplies in doubles if you can. That way you will always have the equivalent available to you. When their (5) five lamps ran out of oil they had more to keep them till their journey was achieved. Which was to meet the bridegroom. Matthew 25:1-13
May we look at every continuous expense in our lives and be sure to have its equivalent stored away like the (5) five wise virgins: An Emergency Fund. So whenever we run out, we will always have in reserve to keep going. C’est bon?!
