Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
        • 9 Convincing Reasons Why You Need An Emergency Fund
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
        • Cadre Real Estate Investing Review: Commercial Real Estate Investing
        • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

Emergency Funds Make Your Life Better! (Or At Least More Stress Free)

By Peter Anderson 7 Comments - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited January 11, 2019.

Share1
Pin
Tweet
Share1
2 Shares

I used to think that emergency funds really weren’t necessary, that they were just something that people who were overly cautious about money worried about.

Why would I ever need to have one?  After all, that’s what credit cards are for!  If we ever have an emergency we’ll just put any expenses on the credit card, and pay it off  as we go.

That’s what normal people do, right?

When we were taking the class  “Financial Peace University”  through our church, we realized just how wrong we had been.  We realized that there are a lot of good reasons why you should save up an emergency fund, and the question about emergency funds is not if you’ll need one, but when you’ll need one.

Emergencies always come knocking, you just don’t know when (see one of our emergencies in the picture below).  Better to be  safe than sorry!

Good Reasons To Start Saving An Emergency Fund

  • Life Happens:  I’ve realized more and more over time that emergency funds are necessary because life happens and small unexpected expenses WILL come up.    They always seem to come up at the worst of times too.  You’re on a trip and your tire blows.   It’s the middle of winter and your heat goes out.   When you have the money saved these things are an annoyance, but not the end of the world.  When you’re having to scrounge up money or put it on a credit card, it’s much more stressful because you hadn’t planned on the expense.
  • Less Stress:  When you have an emergency fund saved, it has an added built in bonus.  Peace of mind! When you’ve got your baby emergency fund ($1000) you’ll feel a bit of a weight lifted off your shoulders because you no longer have to worry about most small emergencies.  $1000 will cover most of them. When you get your 6 months (or more) of expenses saved, you’ll have even more peace of mind because you’ll be able to weather just about any storm that might come your way. Job loss? You’re covered.  Car needs a new engine? You’re covered.  Unexpectedly need a new water heater? Don’t worry, you can pay cash.  At my house this peace of mind is especially reassuring for my wife, which means everyone is happier!
  • Less Risk: When you have an emergency fund (along with other things like health insurance, disability insurance and life insurance), you have a lot less risk of bad things happening.  You’re much less likely to go into bankruptcy, foreclosure or to start accumulating large amounts of debt.  In other words you’re making sound decisions to plan for problems, before they happen.

How Much Money Should I Have In My Emergency Fund?

The topic of how much money should be saved is an interesting one, and to be completely honest may be a different number for different people. I tend to be a Dave Ramsey fan, so I lean towards saving at least 3-6 months of set expenses in my emergency fund.

In other words, enough money to pay for my mortgage, food, transportation, clothing, etc for at least 3-6 months if no other income was hitting my bank account.

Is 3-6 months a hard and fast number?  No, I don’t think so.  You have to figure out how much risk you’re willing to tolerate, and what your personal situation is.

If you’re in a situation where you think a layoff is imminent, and it may be longer than 6 months before you find another job, you may want to get an extra job and save more like 8-12 months of expenses.

If your job situation is more stable 6 months might be just fine.  Again, figure out your family’s risk tolerance, look at individual and family job situations, and decide on a number based on your situation.

Steps To Funding Your Emergency Fund

Setting up an emergency fund is one of the very first things you should do when you’re trying to get your financial house in order. In fact, I think it’s the first thing you should do.

  1. Save up a $1000 emergency fund:   A starter emergency fund is a great idea to have, even if you’re not out of debt yet.    $1000 will be able to cover most small debts that come up – everything from a small car repair to paying for emergency travel expenses.  Only the bigger things like a layoff, major car repairs, etc won’t be covered by this.
  2. Pay off any debts:  Work hard towards paying off any debts that you may have.  Debt is like an anchor tied to your ankle when you’re trying to swim through financial waters.  Take off that anchor as fast as you can or you’ll drown!  Get a second job if you can, work hard, and shed that debt.  Remember, the borrower is slave to the lender!
  3. Figure out your tolerance for risk, and decide on a number of months to save for:  Look at your family’s individual situation, taking into account job situations, risk tolerance, and other factors like if you have disability insurance.  Once you’ve factored all those things in, decide on how much you want to save.
  4. Save up at least 3-6 months of expenses: Start saving your big emergency fund, with at least 3-6 months of expenses, preferrably somewhere between 6-12 months.  Make sure you’re keeping the funds in an account that is very liquid.  In other words, make sure the money is easy to get to.   Take small savings you’re making by budgeting and snowflake it into your account, or get an extra job short term to build it up faster – especially if your job is at risk.
  5. Prosper!:   Once your emergency fund is saved in a nice high yield savings account or money market account, sit back and relax.  You’ve now prepared yourself for the worst case, removed risk, and given yourself peace of mind.  Now you can get about the business of building wealth!

Remember, an emergency fund is only the beginning of a sound financial plan, don’t forget to also start doing a budget, planning for insurance needs (to remove further risk), investing for your future, and giving to others in need!

Do you think emergency funds are a good idea, and have you started saving for yours?  Tell us about your situation in the comments!

  • Paying Down Debt With Gazelle Intensity? How Much Of An Emergency Fund Do You Need?
  • How To Be An Extreme Saver, Or At Least Save A Bit More
  • An Emergency Fund Is More Than Just Money In The Bank
  • $1000 Emergency Fund: Is It Enough?

Related Posts

  • Planning ahead for emergencies
    In The Event Of An Emergency Series: Planning Ahead For Life's Emergencies

    The "In The Event Of An Emergency" series is devoted to the topic of planning ahead for life's little (and big) emergencies that we all…

  • How God Worked In The Life Of One Debt Free Blogger: A Testimonial

    This is an article from Brad over at EnemyOfDebt.com. Read some more of his great posts at his site, or subscribe to his RSS feed.…

  • A Review Of Debt Free For Life By David Bach

    David Bach's latest book Debt Free For Life: The Finish Rich Plan for Financial Freedom, is full of solid financial advice. Here's a review.

Share1
Pin
Tweet
Share1
2 Shares
Last Edited: 11th January 2019 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: finance, Tips

About Peter Anderson

Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don't forget to say hi on Pinterest, Twitter or Facebook!

Comments

    Share Your Thoughts: Cancel reply

  1. Gilbert Van Nforman says

    I use my cashcrate earnings for my emergency fund. I havent had to dip into it yet. But, it is gonna be nice to have if I ever do.

    Great info.

    Reply
  2. Miranda says

    I love my emergency fund. It does offer me peace of mind. And it is there for when I need it. It keeps me from having to use credit cards for unexpected expenses.

    Mirandas last blog post..House Passes Economic Stimulus Bill: I Am Not Amused

    Reply
  3. Craig says

    They are necessary and can easily help if a situation arises. I am younger so my emergency fund is really more of a vacation fund. But hopefully over time can separate the two. Everyone says 3-6 months, some say more if you can, closer to 8 months.

    Craigs last blog post..

    Reply
  4. Kathrn says

    We never had any kind of fund. Until a major hurricane was headed our way;I remember sitting in the parking lot of the grocery store with no money to buy supplies, the charge cards were maxed out and there was no way to get any money anywhere. We were broke. That the day my husband and I prayed that if we made it through this, we would get out of debt and start an emergency fund. That was ten years ago. We are have been out of debt for seven; pay cash for everything and have a 12mth emergency fund to cover full living expenses. We have had to only use it once – when my husband was laid off for 3mths about 4yrs ago. We put back all the money we used and more. We will never have less than a years worth of emergency cash.

    Reply
  5. elementaryfinance says

    On my site, I advocate finding money within your current budget to “pay yourself” If you made coffee at home rather than buying it at the local coffee shop, “pay yourself” that $4 straight in to your savings account. Read my article (linked here) to read the rest.

    elementaryfinances last blog post..I Thought Bonds Bailed People Out of Jail

    Reply
  6. Eponine says

    I had to laugh a Craig’s emergency fund/vacation fund. Up to a certain point, I also do that, although I do have some other money set aside in a couple of different forms. I guess I have enough right to cover 2 months of expenses. I did have more, but I just had to plunder my actual vacation fund a couple of weeks ago to help pay a large dental bill. I guess I won’t be taking any big trips in the near future. :-(

    Eponines last blog post..Impending Flu Epidemic

    Reply
  7. SingleGuyMoney says

    I couldn’t imagine NOT having an Emergency Fund. Without one, I think you are just asking for trouble.

    SingleGuyMoneys last blog post..Are You Really Ready to Buy a Home??

    Reply
Previous Post: Social Media Tip For Bloggers: Link Your Social Media Profiles To Your Blog URL
Next Post: Personal Finance Bible Verse Of The Day: Giving Back
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • How To Save $100k In 7 Practical Steps
  • How to Save Money When Remodeling A Home
  • How To Hire A Contractor For Your Remodeling Project
  • Remembering 9/11 Years Later: Where Were You On That Fateful Day?
  • TradeStation Review: Commission Free Stock And ETF Trades
  • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
  • Cadre Real Estate Investing Review: Commercial Real Estate Investing
  • Best Sites Like Fiverr To Make Money As A Freelancer
  • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
  • 30 Quotes About Easter And Resurrection: He Is Risen!

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2023 · Bible Money Matters | Sitemap | Advertise | Privacy Policy