Ah, parenting (and homeowning), where unexpected surprises lurk around every corner. From a sudden trip to the ER after your toddler decided to turn the couch into a trampoline, to the car mysteriously making that new sound right after you thought you were in the clear, life happens. And when it does, you’re responsible. So, having an emergency fund is like the financial cushion you didn’t know you desperately needed, until BOOM…you do.
Why an Emergency Fund is Every Parent’s Best Friend
Being a parent means one thing: you need to expect the unexpected. Kids are great, but they also tend to bring along surprise expenses like they’re handing out candy on Halloween. And when you throw in the occasional adulting curveball, like a busted furnace in the middle of winter or the family van dying on the highway (both real scenarios that happened to us), suddenly the bank account can feel, well, not needed.
Let me set the scene: Just months after buying a new house and beginning to settle in, CO2 alarms started going off. It was December when the alarm went off and wouldn’t stop. I was at work when Kelly called. She called the fire department and I raced home. We had to stay in my parents house that night and I called the serviceman for the boiler. It needed to be replaced. We were fortunate to have an emergency fund that allowed us to make the replacements so we could get back into our house with piece of mind. We even dipped further into the fund for more security measures in case something like this would happen again.
As you can see, this is where the emergency fund swoops in like a financial superhero. It’s your peace of mind. The best part? With a solid emergency fund, these expenses don’t have to send you spiraling into debt or scrambling to cut back elsewhere. It’s like being able to run a 50K without worrying about tripping on the first mile.
Up to now, I only talked about the ‘smaller things’ like washing machines, cars, etc. But, what if it’s a much bigger thing like getting laid off. Losing your job isn’t easy. It’s quite traumatic. Knowing you have this emergency fund to fund your lifestyle for a few months while you conduct and land your next job could, quite literally, be a life saver.
How Much Should You Save?
Everyone’s needs are a bit different, but most experts recommend having 3 to 6 months’ worth of expenses stashed away in your emergency fund. But let’s be real: that can feel like an intimidating number, especially if you’re starting from scratch.
Here’s a simplified realistic approach:
- Start small. Even putting away $500 can be a game-changer when those smaller unexpected costs pop up. You’ll be amazed at the relief a few hundred bucks can bring when you’re not throwing every little thing on a credit card.
- Aim for at least one month of expenses. Once you hit that first $500, shoot for enough to cover one month’s worth of bills. Then build up from there. Baby steps, just like potty training, slow and steady gets you to the finish line without too many accidents.
- Automate your fund. You can even set auto deposits from your job, or auto transfers from your direct deposit account. This way, it just moves on its own, like it was never yours to begin with.
- Stop Funding Your Emergency Fund. Ok, so you have 8 months of expenses saved. Congratulations! Stop funding your emergency fund now and start feeding that money into a high yield savings account for the kitchen remodel or that vacation you promised the kids. Better yet, throw it into the stock market into ETFs for long term goals to help boost returns even more.
Where to Keep Your Emergency Fund
Now, I know we just talked about high-yield savings accounts (if you missed it, go check out my last post!). And guess what? This is the perfect place to park your emergency fund. Why? Because:
- It’s accessible, but not too accessible—so you won’t be tempted to dip into it for non-emergencies like “that extra fancy coffee machine you’ve been eyeing.”
- It earns interest. Let’s face it: if your emergency fund is sitting in a regular ol’ checking account, it’s not doing much but gathering dust. In a high-yield savings account, your money can at least pick up a little extra along the way.
Building Your Emergency Fund (Without the Stress)
Here’s the deal, saving up for emergencies shouldn’t make you feel like you’re in a constant state of emergency. Here’s how you can get started without feeling like you’re depriving yourself or stressing about every penny:
1. Start with a Budget (But Make It Flexible)
Remember when I mentioned that I used to track every single penny I spent? Well, while that level of intensity isn’t for everyone, having a budget is the best way to know where your money is going and how much you can set aside for emergencies.
It doesn’t have to be perfect, but you should at least know your monthly expenses. Once you’ve got that locked in, you can figure out how much you can realistically start saving.
2. Automate Your Savings
Life as a parent is busy enough without having to remember to transfer money into your emergency fund each month. Set up automatic transfers from your checking to your savings. Even if it’s only $50 a month, automation is the key to consistency. Better yet, you can even set it up on your direct deposit with your employer so it acts like a deduction. Except this deduction is all your money being directed right to where you need it.
Plus, when it’s automatic, you’re less likely to “accidentally” spend that money on the latest gadget or another subscription service you’ll forget to cancel.
3. Save Your Windfalls
Got a tax refund? A holiday bonus from work? Maybe even some birthday cash from Grandma? Instead of treating it like free play money, stick a chunk of it straight into your emergency fund. It’s the quickest way to make a serious dent in your savings goal without messing with your regular budget.
4. Cut Back (Just a Little)
I’m not suggesting you ditch your morning coffee or cancel all the fun stuff that keeps you sane. But if you take a close look at your expenses, I’m willing to bet there’s something you could cut back on for the sake of building your emergency fund. Maybe it’s skipping that extra streaming service you barely use, or packing lunch once or twice a week instead of eating out.
5. Treat It Like a Non-Negotiable
An emergency fund isn’t a luxury—it’s a necessity. Once you have it, treat it like it’s untouchable, unless there’s a real emergency. This isn’t the fund for a spontaneous weekend getaway or new shoes (even if they’re on sale). This is for when life throws you those curveballs you didn’t see coming.
Why Building an Emergency Fund Helps You Sleep Better at Night
Look, I’ve been on both sides, living paycheck to paycheck, scrambling when an unexpected cost popped up, and then later having a solid emergency fund in place. The difference is night and day. An emergency fund is financial peace of mind. It’s knowing that even if things go sideways, you’ve got a backup plan.
So, whether you’re just getting started or never even heard of a rainy-day fund, now’s the time to take action. Don’t wait for the furnace to break down, the car to need new brakes, your kid’s dentist to call with a surprise bill, or to get laid off. Start small, build steadily, and before you know it, your emergency fund will be there to save the day (hopefully you’ll never really need saving though).
PS: This should be in my post about the things no one tells parents.
