We all know that emergencies happen unexpectedly. By being prepared before the emergency, you can greatly reduce the stress at the time. Many people live by the “it will never happen to me” thought and so the thought of starting an emergency fund never crosses their mind. The fact is, not one of us knows what the future holds for us.
Your emergency fund is not for saving up for your next vacation or new clothes. It is for when the unexpected happens such as the car packing up or losing your job. Without this fund put away, you can easily find yourself spiralling in to debt.
I personally know people that believe an emergency fund is unnecessary and they are very wrong. Some of these people have ended up coming to me to borrow money when the unexpected happens. Yet, they still don’t see the need. Today we are going to look at how you can be better prepared for the unexpected and start building your own emergency fund.
When it comes to how much you need to save there are many different people who will give you many different answers. In my opinion you should do what works for you. Anything is better than nothing so don’t worry about starting small. It will soon build up.
Why not also check out our post showing some simple ways that you can earn some extra cash to put away for your preps.
How to Start an Emergency Fund
Anybody can start an emergency fund, here’s how:
Where Will the Funds be Placed?
Although many people suggest having a separate bank account for your emergency fund, I don’t agree in placing this fund in the bank at all. If the grid goes down you’re not going to be getting your money as ATM machines and card readers both need electricity to work. Not only this but if the bank closes, your money goes with it. This may seem extreme but we have seen it happen before all over the world. So where should you keep your emergency fund? This is where you need to get creative.
It is important that you don’t keep all of your cash in the same place. If you get broken in to and they find one stash, chances are, they will think that is all the cash in the house. Let’s take a look at some ideas:
- Flashlights – you can roll some of those bank notes up and hide them inside your flashlight.
- Under Drawers – places some of your money into an envelope and stick it to the underside of drawers.
- Behind Clocks – if you have wall clocks, you can tape cash behind it.
- Wall Mounted TV – in the same way that you hide cash behind your clocks, you can do it with a wall mounted TV.
- Ironing Board – if somebody breaks in, they are unlikely to give the ironing board a second look. Put some cash under the cover.
- Ceiling Fans – tape some cash behind the center part of the fan, and not the blades.
- Books – place cash between several pages in a random book or two on your bookshelf, or go for the old school hollowed out book.
- Pocket of Shirt – place some of your money in the pocket of a particular shirt in your closet.
Develop a Goal and a Plan
You need to think about what your goal is and how much you are going to start regularly putting away in order to achieve it. You plan needs to be realistic, don’t plan to put away an extra £300 over the next couple of months if you just can’t afford it. Don’t be afraid to set a small goal and then any extra is a bonus.
Have a think about your monthly budget and where you can cut back in order to make this easier. If you have magazine subscriptions that you don’t need or gym memberships that you don’t use, cut them and use this money to put aside.
Stick to Your Plan to Reach Your Goal
Once you have your plan in place, make sure that you stick to it. This will be the hardest step of all but if you set realistic goals then it will be much easier.
I would love to hear from our readers so share your own ideas in the comments below so I can get them added.