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Everyone Needs an Emergency Fund

You’re driving home from work one day, when all of a sudden, your check engine light comes on about the same time you start to notice black smoke coming from under the hood of your car.

Which would describe your next course of action?

A) Pop the hood and immediatly diagnose the problem. Run to the auto parts store (in this scenerio, you are an Ironman Triathlon alumni, and running five miles is no sweat) to pick up a new thingamabob needed to fix the problem. Run back to the car, and fix it with enough time to get home by dinner.

B) Call your spouse or friend to come pick you up. You are concerned, but not too worried because you have some money saved up for emergencies such as this.

C) Call your spouse or friend to come pick you up and try to remember if all your credit cards are maxed out because you know you have $3.75 left until your next paycheck, which you might not get if you don’t have transportation to work.

Life is full of uncertainties. If you chose answer C to this question, it might be time to start thinking about starting an emergency fund. It is hard to know how much you might need to cover life’s little hiccups like an injury, illness, car repair, or home emergency (ever come home to a broken water heater?). Most experts will tell you to keep a minimum of three to six months worth of basic expenses on hand, sometimes even more. That can sound very daunting to someone who is living paycheck to paycheck with no apparent room to cut back.

If you haven’t started you emergency fund because it seems too overwhelming. Make it a goal to save $100. There are many ways to achieve that, but to name a few:

Make every meal for a month come out of your kitchen. You might be surprised how much money you are wasting on the extra value menu. Probably at least $5-$7 a day. You can make a turkey sandwich and apple for under $2.

Drink water. You might also need milk if you have kids, or coffee if you can’t speak in complete sentences in the morning without it. Make it at home, though, and cut out soda, sports drinks, or energy drinks.

Cut your cable. My husband would go into withdrawal, but if you have no savings, this is a surefire way to save up a few hundred dollars pretty quickly. When you are fully funded, you can add it back again.

Don’t go to the store. If you don’t go to stores, you won’t spend money. If you have to buy groceries, make a list, buy what you came for, and leave. Put on the blinders and don’t look around.

Stop smoking. I can’t tell you how many people have told me they can’t afford this or that, but smoke a pack a day. I know it is a hard habit to kick, but choose cigarettes or an emergency fund. If you choose the former, don’t complain that you can’t afford something else. You are choosing not to afford it.

Make a budget. This is probably the most important one and something I have struggled with. Honestly, though, if you don’t know where your money is going, it’s hard to know where you can save. You should know where every penny goes.

It might take some plannning, but I believe anyone can save $100. When you reach that goal, increase the fund to $500. You’ll find that once you start saving, it gets easier. $500 can give you enough breathing room to cover a doctor visit or most car repairs. I promise you will sleep better at night knowing you won’t have to sell your plasma or pawn you wedding ring to get the car running again. Once you have a small emergency fund, you can work on planning for a catastropic problem like a long term illness or lay off, but Rome wasn’t built in a day. Start with $100 if you have no emergency fund, and work up from there.



About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. Some great idea’s there on how to save a couple of dollars here and there. I must admit though that my emergency fund sits against my mortgage in my offset account, that way it can earn the best interest for me.

    • I think as long as you can get to it if needed, that’s probably a good idea. Hard to earn any interest on liquid savings these days.

  2. These are all really good, practical tips. I also would go into withdrawals without cable, but I am also open to cutting it if needed. If you really are running so low on funds that you have almost no money until the next paycheck, cutting cable as well as other drastic measures would be warranted in my opinion.

    • We never cut our satellite TV, even when we had all the credit card debt. When you give up most of your other spending habits, sometimes you have to save something. Like you, though, I would certainly stop it tomorrow if I had no money at all saved up.

  3. Great tips and I love that you suggest starting small. For many I think it’s just the act of saving that is the challenge. But, starting with a small amount can turn it into a discipline.

    • When I was deep in debe and used to watch shows like Suze Orman and she would get on people if they didn’t have 8 mos of expenses saved up, I just felt like that wasn’t possible. I’ve always had some money in savings, but not that much. I still probably don’t have 8 full mos, but I realized you have to just set a goal, meet it, and keep raising the bar. Starting is the hardest.

  4. Le sigh-I need to use some of these tips. And I”m excited about your giveaway!

  5. Mandy - Money Master Mom

    I realized the other day that 90% of items in the grocery store are things that I’ll probably never buy. I’m bad for business, but my emergency fund is pretty solid!
    Hope your giveaway is a grand success!

  6. That’s a great example you have at the top! I entered via Frugal Portland already 🙂

  7. These are great tips….all of them. It is especially true of smoking. How can people afford to smoke?!?!?!?

    • I don’t know. I grew up in KY, where just about everyone grew tobacco as a cash crop, so LOTS of people smoke. My Dad started smoking in high school, and after two aneurism surgeries, a carotid surgery, and a stroke, he still smokes. They have no bills, a good, healthy retirment fund, long term care insurance, and kids are grown, so I try to just let it go. He actually can afford it. Should he, no, but it’s not worth the friction. He knows he won’t live to be an old man. However, probably my biggest pet peeve is people who are on public assistance and smoke. I think if you spend one penny on cigarettes or booze, you should have that amount deducted from your assistance. Not fair at all.

  8. Having an emergency fund is a huge deal and I’m thankful we’ve been able to have ours in place for as long as we have! I’ve actually followed nearly every tip you put up there! Oh yeah!

  9. We live by all your tips except we’ve only had a few months over the last year when we didn’t eat out at all. Still, our EF is underfunded. But we’ve never had to use it – knock on wood!

    • I’d be curious to see what everyone considers an adequate fund to be. Is it the traditional 3-6 mos of basic expenses? More? Less? For me, I need to have enough to get through a few months of mortgage payments and bills. If it looks like long term trouble, we can always sell our house at a rock bottom price if we had to. I’d need enough to be able to get to that point. Maybe a good post idea?

  10. When I was working full-time I never really worried about building an emergency fund (or saving for a rainy day, as my parents called it). Any life issues I may have had (but didn’t) were covered through benefits or insurance. Now that I am older and we have done everything you listed above to reduce our debt I am really thinking alot more about the need for an EF. We only have about $2K saved, but we’ll continue to add to it as we go.

    • I think $2K would be enough for most everyday emergencies. I feel kind of like you do about work. Even if my job dried up here, I could find work somewhere, even if it meant traveling or moving. I really need to work on what if I became disabled and couldn’t work? Then work on having enough emergency savings to get by for a while. We have our liquid savings and could always cash in Roth IRA’s if we absolutely had to. It would probably take a little while to have funds in hand. That’s why everyone needs at least some money that you could get to today if you had to.

  11. I cut the cable over two years ago and I also avoid the stores as much as possible. I definitely only eat out when it’s on the company dime these days and that happens often enough that I don’t feel like I am missing out by not going out to eat on my own. Another good way to save is being aggressive about lowering all your current bills. I call my cell phone company to get charges refunded, shop my car insurance quotes, balance transfer my credit cards (the balance is left over from my former terrible money habits), keep the lights and fans off, switched to bar soap and powder detergent, shop at the 99 cent store for really basic stuff like cotton balls and paper towels, etc. There are so many little things you can do and since I have made them into a reward (you saved $10! Put it towards your credit card!) it’s been a lot of fun seeing my monthly bills list go down significantly.

    • Congratulations on changing your money habits. We have had a similar revelation over the past couple of years. Thanks for sharing you tips.

  12. Ugh, I hate emergencies. I’ve cut just about everywhere now, the only thing left to do is move to a cheaper state or earn more money. Or both. I’m tired of renting.

  13. Having an emergency fund is just smart. These are all great tips and I use many of them in my daily life. Sometimes though we need to increase our income rather than just decrease our expenses. Making more money can allow us to save more as well as enjoy our lives.

  14. Wooo! Thanks for letting us know again. I almost missed it!

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