I’m always telling you to put money in your emergency fund and for good reason because life has a funny way of throwing us curve balls when we least expect it.
Just recently we had to take my son Jack to the dentist because he had two little cavities that needed special attention. Now my son is very afraid of his mouth, he doesn’t want anyone to touch his mouth, and based on the severity of the cavities he would need filling in order to prevent further damage or gum infection that would start causing him pain. So we decided that we had to do the surgery to put in the filling. Thankfully the doctor was able to squeeze us in to do emergency surgery on the following day, however, what was supposed to be a usual JA $10,000 visit was now a whopping JA $400,000 that had to be paid upfront, which is about $3000 USD and we thought wow this is a lot of money we weren’t planning for.
Luckily we had our emergency fund for this kind of thing so we were able to pull from this fund and get our son the surgery that he needed. Had we not had that emergency fund, things would have been a lot harder for us.
The key thing here is that we never know what can happen, especially with our loved ones so we always have to be in a position where we are able to provide the support that is needed, and having an emergency fund is exactly what is needed for uncertain times.
Having an emergency fund gives you a financial buffer that you can rely on in a time of large unexpected financial needs instead of having to rely on credit cards or a loan.
A good rule of thumb is to have enough in your savings to cover at least three to six months’ worth of living expenses. That way if you do lose your job, or have a medical emergency as we did have unforeseen vehicle expenses or any other financial emergency, you could use the money you have put aside.
Investing is the way to wealth, but it is important not to tie up ALL your money in investments. Ensure that you also build your emergency fund in a high-yield savings account for fast access to money when it is needed.
This is why I stress, “do not invest your emergency fund.” We have to be wise on our way to being wealthy. And yes, it’s possible to have money to live, money to save, and money to invest. If your current income can’t stretch in order for you to live, save and invest then it’s time to consider increasing your streams of income.
Avoid getting caught financially unprepared for life’s surprises. Remember, it is important to stay ready, so you don’t have to get ready.