The word “emergency” originally comes from the Latin “emergere” meaning “appear”, in the case of an emergency fund it really does mean something that needs to appear pretty quick because you need to lay your hands on some cash straight away.
From the first time you are given pocket money as a kid, you are told to not spend it all at once, but to save some for use later. The phrase “save for a rainy day” is one I remember being bombarded with from my parents, it never made sense to me as we lived in the UK and pretty much every day was a rainy day. I learnt later that it wasn’t meant to be literal. Saving, however, is not easy – and never has been. The calls on your cash from everyday life are difficult enough to meet without adding further pressure on yourself by trying to save. But saving is worth it in the short, medium and long term. And here’s why…Something will go wrong in your life that will need cash to put right. Notice I said “will” and not “might”. This is because I really did mean “will”.
If you drive a car, then there are an almost infinite number of things that can go wrong with it, at virtually no notice either, from punctures to flat batteries and cracked windscreens to having to pay insurance excesses. All these mishaps will need immediate attention if you want to carry on with getting to work or taking the kids to school. And it will cost. If you own anything with a plug on it, then it can, and almost certainly will, go wrong. TV, computer, washing machine or Kirby trouser press; all of these essentials (ok, possibly not the trouser press..) will cost to replace or repair. If you have children, then the cost of unexpected school trips and unexpected damaged uniforms are actually to be expected. Got a dog? Can you guarantee that your canine friend won’t ever munch your favourite shoes? Got a house? Has it got guaranteed “non damageable ever under any circumstances” guttering? I thought not.
To meet these challenges of everyday life there are pretty much only two options. You take the necessary cost from savings or you hit the credit card or take a loan. By far, the first option is the cheapest. But how do you save? The simplest way is to treat saving as an essential bill. If you can get into the mindset whereby putting a little money away each payday is a bill you have to pay, then it becomes a bit easier. Most current account providers will happily arrange for a savings account to be set up side by side with your current account. Arranging an automatic transfer into the savings account on the day you get paid couldn’t be easier. If the account provider offers you a card so you can easily make withdrawals from it, say no! Make it a bit awkward for yourself to withdraw money from your savings account. You’ll be surprised how soon you’ll give up trying if you have to put some effort into getting the money out!
If you are the type who will go the extra mile to do things just that bit better, then you can look around at the various Monthly Savings Plans that the banks and building societies provide. Some of them even pay (by current standards) an almost acceptable rate of interest. Researching these accounts is really easy using any of the comparison sites available online and setting up a regular deposit into them is also very easy as well.
Having an emergency fund is a necessity, because emergencies will appear just when they are least expected. Wouldn’t it be great to feel just a bit smug for planning in advance rather than feeling miserable for not?
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