Picture this: It’s a sunny day and you’re on your porch enjoying nature. There’s a light breeze and the temperature is just right--not too hot, not too cold, and no stuffy humidity or allergies to be found. You’re engrossed in a good book, enjoying the scenery and the soundtrack of the birds, or watching your kids play together without a single squabble. Glorious, right?
Those *just right* moments are such a gift.
Now imagine you’re in the middle of enjoying your once-a-year perfect afternoon when you walk back in the house to reapply your sunscreen (safety first!). You notice it’s a little warmer than usual, so you check the thermostat. Surprisingly, the temperature reads 5 degrees higher than what it’s set to and it’s not even the hottest part of the day yet! In that moment, what do you do?
- Reapply your sunscreen, find the number for the HVAC company, and head back outside to give them a call for service.
- You don’t have the money for this.
For a significant amount of people, option 2 is the response. According to a survey conducted by Bankrate.com in July of 2021, nearly 25% of Americans have no emergency savings and another 26% have less than three months’ expenses saved in an emergency fund. That means that 51% of those surveyed would have difficulty covering this unanticipated expense.
It’s not too late to make some changes so that you can choose option A. A typical emergency fund consists of 3 to 6 months’ worth of expenses. It’s calculated on the expenses that you would still need to pay even without any income. This would be your rent/mortgage, utilities, groceries, etc. It may seem like an emergency fund means you’re living in fear or thinking pessimistically. Both are valid concerns; however, an emergency fund is just another tool to provide peace when, should the worst-case scenario happen, you’re prepared.
Below is a worksheet to help you think through how much you should save/want to save in your emergency fund. There is a spreadsheet version as well as a PDF version that you can print and complete by hand, whichever you prefer.
Emergency Fund Worksheet - Excel Version
Emergency Fund Worksheet - PDF Version
Remember: This is your EMERGENCY fund. Once the money goes in, it doesn’t come out until there’s an actual emergency. (Ice cream, an upgraded phone, or a fancier couch don’t qualify.)
If you’d like to get some additional budgeting help or just aren’t sure where to start, reach out to me at email@example.com. We can see if the budget coaching we offer is a good fit for you!