An emergency fund is not for a Hummer
What is an emergency fund?
It is an account that has funds set aside to use in the event of a job loss, a major expense or illness. An emergency fund is to provide financial security for you and your household so that you are not consumed with how to make ends meet in lieu of an unforeseen event.
The ideal emergency fund should consist of eight to twelve months of household expenses. A a personal wealth expert, I lean more toward twelve months. For business owners, I also suggest you create an emergency fund to continue with operating expenses.
For those who have reached their financial goals and saved for twelve months, congratulations! However, it doesn’t mean that it is the green light to spend the funds whenever you feel the itch to do so.
Although you may not have needed the emergency fund in quite some time, the day may come when you have to do so.
Remember, an emergency fund is for the incidents that were previously mentioned, not the fully loaded luxury vehicle that caught your eye.
Don’t spend your {emergency} account on your wants. If you truly want to reward yourself for the discipline it took to save to reach your goals treat yourself with a small token of appreciation.
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“Love yourself enough to support yourself.”
© SMG, LLC
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- Certificates of Deposit (CDs): Emergency Funds as a Backup (ally.com)
- Savings is more mental than physical (fabulousandmoneysavvy.com)
- Why We Need an Emergency Fund (godsmasterpieces.wordpress.com)
- 6 Steps to Financial Security (moneymanager.com)
- Why Did Economists Get It So Wrong in 2011? (blogs.wsj.com)
2 Comments on “An emergency fund is not for a Hummer”
Your fabulous comment!!
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Great post – I like doing the dual savings – one for an emergency fund and one for a treat.
Seeing the Hummer I want to give it a bumper sticker “I am changing the envionment – ask me how!”.
I like that bumper sticker!! A dual savings is a great way to build for an emergency while saving for a treat. You feel as if you’re not depriving yourself.