Given the vast amounts of information already out there, you may be asking if we ever need another article on emergency funds. I worked out this week that when life happens, and the nonsense hits that fan, an emergency fund is about more than just money.
Having an emergency fund is ‘margin’, that comfortable space between you and panic or you and worry. I have worked out (the hard way as always) that setting up that initial emergency fund could be the single most important thing you can do if you want to sort out your financial situation.
Particularly if you’re a Late-Starter.
I am following the route of having an initial emergency fund of R 15000 to start off with. I will then attack my debt and once that is done (and yes, I will succeed) I will set up the long-term emergency fund with at least three months expenses.
For now, the initial fund is the issue.
This month I started that initial emergency fund and I managed to put R 2000 away. I will tell you that my confidence was boosted immediately (I can do this!) and I saw the glimmer of hope.
My front-gate fell off the hinges!
I am understanding the importance of that emergency fund because on Friday night when I arrived home my front-gate (actually) fell off the hinges. That may not sound like an emergency but the fact is I need the gate fixed as quickly as possible. That will cost money. That money is going to come from somewhere.
Let me rewind (I so wish that I could do that!) and start my emergency fund last year. Fast-forward back to the present.
I have R 15 000 in that initial emergency fund. I call a welder and I have the gate fixed. I expect the costs to be approximately R 2000. I pay that immediately and then started re-filling that fund. That is how easy it could have been (should have been).
But I didn’t start my initial emergency fund last year so I must take the cash from my income or from a credit card (don’t do it Journey-Man!) The fact is, that the money I spend on repairing that gate will come from Future-Me and I will need to have a chat with him to apologise for what I am about to do.
There is anxiety associated with all of this.
Present-Me is worried about where the money will come from, what the consequence of using the cash will be. Present-me is worrying that there may just be another emergency in quick succession.
The confidence that may have been built up during the knowledge-gathering and planning phase can be depleted very easily. This is definitely not just about money. When unexpected things happen and we have no margin, we can start asking some pretty depressing questions, making negative comments and thinking negative thoughts.
This always happens!
Just when I get started!
Now I can’t save!
This is never going to work!
Why did I think I could do this now?
I think that pretty much sums up the reality. Because I don’t have an emergency fund, I will be affecting Future-Me (and his gorgeous wife and beautiful kids – I hope they don’t read this because Journey-Man will be in trouble). If you haven’t set up an emergency fund then maybe today’s the day!
Firstly, I decided not to use a credit card to pay for this emergency.
I had a repair job done, which cost me under R 1000, which is good enough for a month or three (that gate will hold). I paid for that from the R 2000. That means I ‘m not going to get to where I wanted to this month, but I have certainly made a start and I am not going to turn back.
The main lesson though, is that before now, I would have (unconsciously) paid for a full repair with my credit card (because that’s just how we do things here!) I would have made that payment completely unaware of the real cost and the real debt I was going to incur. I think that’s already progress and I remain positive and optimistic.
So do yourself a favour (yes, I will beg) set up an initial emergency fund and set aside money for when ‘life happens’. This is about more than just money. This is about really breaking free and moving forward. Do something today!
In case you need detailed information about emergency funds, here are few of the WellSpent articles covering this important topic:-
Or head over to one of our favourite blogs Take Charge of Your Money for other excellent emergency fund articles:-
Keep going fellow traveller!
Until next time, this is Journey-Man
Working hard, walking hard and taking drastic action. Not just for myself, but for my kids and the next generation of Journey-Men and Journey-Women.
Next time on LSJ* : Monthly Report Back?
*LSJ : Late-Starter Journey (of course)