When it rains, it pours. We are all familiar with that statement, and if you’ve never heard of it, it means that your day is just bad. It feels like you’re barely treading water and everything that can happen, is happening all at once… and it comes at times when you least expect it.
An example of a rainy day…
You’re driving to work and suddenly your car breaks down, then when you get home, you find out your washer stopped working… so you’re feeling overwhelmed by everything so you want to blow off steam and decide to mow the lawn… only to find out the lawnmower doesn’t want to start. A prime example of, when it rains, it pours. I know I’ve experienced a day like this and, let me tell you, it is beyond frustrating.
When you look at everything that decided to stop working, the cost of replacing or fixing starts to add up, quickly. The car needed an oil change ($20) and a transmission flush ($150). You find out the washer is not fixable, so you go buy a new one ($400). Last, while you are out buying a new washer, you decide to replace your lawnmower ($200) too because your lawn is as high as your mailbox. Your grand total comes out to $700. Ouch… that is a lot.
We are all going to experience a time when it feels like everything you own decides to randomly crash and burn, all at one time. It is bound to happen. My question for you is, how do you prepare for those unplanned expenses? Do you have a game plan or a just in case fund? If you answered no, I have a simple answer for you… and that is an emergency savings! It can be your guiding light. With this type of savings, you can combat those pesky, unplanned expenses and you can let them know who is boss. YOU!
Now you may be asking yourself, “Self… what on earth is an emergency savings account? How do I get one?” An emergency savings account is simply a secondary savings at your financial institution. While there aren’t many big differences, the one main difference is that this account is completely separate and not linked to your checking account like your primary savings is. You can get a secondary savings by talking to a teller or your personal financial service representative. I imagine my secondary savings as my own personal piggy bank. It is only affected by what you put in and take out of it.
How do you turn that brand new savings account into an emergency savings account?
- Automatically schedule a weekly transfer from your checking to your new savings. Fun fact: we all say we are going to do this and that, but then it never happens. This is why setting up this transfer, automatically is vital to building up your emergency savings. Easy peasy lemon squeezy. Yes I just said that. I’m a dork. Moving on…
- Determine how much you want to be transferred. I set up my transfer to take place on every Friday and I requested that $25 be the amount to be transferred. I also dump any extra funds I get, into this account as well. You can choose any amount you want, as long as it fits within your budget.
- Watch your emergency fund grow! This is the exciting part.
Now you might be thinking, “$25 is a lot and I don’t think I can do that every week.” Guess what, every person’s budget is different and you know what you are comfortable transferring each week, or month. I selected $25 because it fits within my budget and this amount allows my emergency savings to grow quite rapidly. I will roughly save $1300 by end of the year. $25 X 52 weeks = $1,300.
Seems pretty easy, right? I challenge you to do it along with me! Together, we can take on the world. You got this.
Now… make time to visit your credit union; open a secondary savings, set up an automatic transfer from your checking to your new savings, and then watch your emergency fund grow.
Knowledge is power.
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