The Emergency Fund (No Excuses!)

This is yet another post on the importance of having an emergency fund. It is a subject that has been beaten to exhaustion by every living personal finance author and probably some that are dead, but every year another survey is presented that shows the average American family is horribly ill prepared for even a small emergency. Please, even if you are living on public assistance, save a little something every time any money crosses your palm. The pay yourself first rule of thumb is skim 10% of your pay before you spend a penny. Put it in a bank account—or a cigar box hidden under the sofa—if you don’t have enough to open a savings account. If 10% isn’t a realistic possibility given your monthly bills, start with something small, like a ten dollar bill.

I agree with Dave Ramsey’s minimum $1,000 emergency fund. If you are an adult living in America and you can’t put your hands on $1,000 cash, you have an emergency. The fact is most Americans have bought into a materialist nightmare. We not only spend everything we have but we routinely spend more than we make.

Let’s look at families earning between $75,000 and $99,000 a year:

21.1% reported that they didn’t have a savings account.
21.8% reported that they had $0 in savings!
10.4% reported that they had between $1,000 and $4,999 in savings.
9.3% reported that they had between $5,000 and $9,999 in savings.

Let’s look at families earning between $100,000 and $149,000 a year:

7.7% reported that they didn’t have a savings account.
13.8% reported that they had $0 in savings!
23.1% reported that they had between $1,000 and $4,999 in savings.
7.7% reported that they had between $5,000 and $9,999 in savings.

OK. I get it if you are earning $30,000 or less it is going to be hard to skim off even a few bucks for savings on a regular basis, but do it anyway. Even ten or twenty dollars a week is better than nothing. You might even want to consider a temporary part time job for a couple of months to get something into that emergency fund.

People! If you are earning over $100,000 a year, you are in the top quintile. Your salary puts you into the top 20%. And you have to tap the credit card to get your $60,000 SUV through state inspection if one of your tires doesn’t have enough tread left to pass? Unless your family recently suffered a major uninsured catastrophe, I don’t want to hear your excuses. Start saving money for the future. Emergencies happen to everyone, but if you have an emergency fund, that emergency is no longer an emergency.

I hope I don’t have to write another article on this subject anytime during the next six months, but I expect there will be another survey and that I will feel obliged to write another post.