How Much of an Emergency Fund Should You Have?

Having some extra money around for emergencies can very suddenly become important. That’s why it’s called an emergency fund, after all. It’s not something you expect to need all the time. But if you keep waiting to build one up, the emergency might come before you’re ready.

This is especially important when you’re an at home parent and the budget is already tight. It may be hard to save up for an emergency fund, but if you need it someday, you’ll probably really, really need it.

So where can the money come from?

Pocket Change

Pocket change can quickly add
up to create your emergency fund.

Many people find dropping their pocket change into a jar the easiest way to save money. You probably won’t feel as though you’re depriving yourself. Yet it adds up surprising fast for many people.

Put a Small Amount Aside Each Month

It may be easier for you to just put a little bit of money aside each and every month. It can just be a few dollars if that’s all you can spare, but the more you can put in the quicker you’ll have an emergency fund capable of dealing with the cost of any sudden and necessary expenses you encounter. Don’t be too relaxed about putting money aside.

Cut Your Spending on Treats

What’s your special little treat you get for yourself? Coffee from a coffee shop? A bit of candy when you go grocery shopping? Meals away from home?

Whatever you’ve been allowing yourself for treats, try putting that into the emergency fund instead. It’s a bit of a pain going without the fun stuff, but the more dedicated you are to putting that in your emergency fund until it reaches your goal, the sooner you can get your treats back if you still want them. You might get used to doing without.

Earn a Little Extra Money

You don’t need to get fancy and start a home business for this. I mean, you could, but if you just need a one-off to earn some extra money for a rainy day, try something simple such as having a garage sale and putting all proceeds toward your emergency fund.

A garage sale is
a quick way to bring in cash for an emergency fund.

You certainly can do more if you want to build a really great emergency fund, but remember that it is very easy to find ways to spend all the income you make at any level. Find a way to keep the extra as extra for as long as possible and make your emergency fund really healthy. Then save or invest the rest.

I have more basic ways to earn money from home listed at How to Earn Money at Home When You Can’t Find a Work at Home Job .

Don’t Spend Bonuses or Overtime Pay

When your spouse brings home a little extra in the paycheck, put it aside rather than splurging on a treat. Paying down bills is of course another good use if that’s what you need. The point is to make sure that you are more financially secure before you start doing fun things with extra pay.

Keep Working at It

Building a cash emergency fund may not be fun if you’re already on a tight budget. But if you have one when you need it, you’ll be grateful that you didn’t have to pull out the credit cards and add to your bills to make things work out. You can deal with the expense and rebuild your emergency fund once again.

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2 Responses

  1. Great advice. Having an emergency fund to carry you through periods of unemployment is so important.

  1. June 8, 2010

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