Basics Of an emergency fund

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I remember the day like it was yesterday - and it happened about a year ago. My cat (yes, I have a cat, I'm THAT person) was limping, but being overweight and a little more rotund than his other cat-mates, I just brushed it off and thought he sprained his leg or something from jumping too high off the counter. I waited the usual 6 weeks (takes about 6 weeks for n sprain to heal fully), but when things weren't getting better, I decided to take him to his vet. I wanted to get an X-ray to make sure he didn't fracture a bone...but I got even worse news. It turned out he had cancer. Cancer was eating away at his joint and that was why he was limping - it hurt too much to bear weight with regular walking. The first thing that went through my mind was, oh my God, how can I afford this? I did not have pet health insurance (he was only 3 years old - and the vet said it was very rare that a young cat like him would get cancer). After discussing the prognosis and the potential that his cancer could be cured with an amputation, we crunched the numbers with our vet about how much it would cost to undergo such a big surgery. I know for some, a cat having cancer isn't necessarily an 'emergency,' however he was in our lives since he was a kitten, saved from the street, and he became a part of our family over the years. I'm so glad we had an emergency fund saved on the side, otherwise we would have had a serious discussion on what to do with his diagnosis. (Update: he's 1 year post-surgery and doing well as a three-legged kitty!).   


One of the foundations of personal finance advice I always get is to have an emergency fund.  I didn't really heed that until several years ago, and I'm glad I did - otherwise I wouldn't have been able to help my cat when he needed it most. You just never know what emergency may come up (that’s why it’s called an emergency), AND I always have to remind myself... that yellow sundress on sale that I. MUST. HAVE. is not an emergency!

What is an emergency fund?

An emergency fund is a sum of money that you have easy access to and can easily liquidate should you come across a dire situation where you need a lot of money really fast (such as, medical emergencies or your car broke down and you only have one car that you need to get to and from work, or heaven forbid you got laid off of work and now need some income in-between jobs while you look for a new one). 

It’s not a savings account, nor is it an investment or retirement account where you might be penalized for taking the money out early.

How much should be in an emergency fund?

Generally speaking, a good base amount would be roughly 3 months of your income. It should be a good amount to where you could reasonably live off of if you had no other income source. Once you hit that amount, you can always contribute more!

Where can I store my emergency fund?


"1 year after my limb amputation, I'm doing just fine, and cancer free!"

Valentine's Day 2017

There are options to where you can either have an emergency fund in a checking account in your same brick and mortar bank or you can try your hand at online banking. I use a high-yield checking account, but there are others. Make sure you check the terms and conditions of checking accounts; sometimes a checking account might require a minimum balance, and you’ll be charged a fee if that account goes below the minimum. Other banks that people use are: 

  1. Ally Financial, Inc
  2. Chase Banking
  3. Schwab Bank high-yield Investor checking (unlimited ATM fee rebates, no minimum deposit, free to set up)

Use a bank that your family uses or one you trust. I did a lot of research online before I decided to use the bank I have; in the end, it’s about customer service and the trust you have in that particular bank.


How do I get extra money to save with all my expenses too?!

It can be daunting to think "I have to save AND be able to have enough money to cover my expenses?”  And that’s where a budget can help you! Divide your monthly expenses into fixed and unfixed. Fixed expenses are those you know will be the same amount each month (i.e.: rent or mortgage, health insurance, car insurance, etc). Unfixed exposes are those that can fluctuate depending on your use (such as, gas expenses, groceries, eating at restaurants, etc). Then calculate the total for the first  2 months and take a look at your monthly expenses. Some months might be higher than others depending on the year; for example, December might be a big spending month due to the holidays. Look through your expenses and see what category you can try and cut down in - maybe you can bike to work instead of drive? or you eat out 4 times a week and could cut that back to 2 times? You’d be surprised how saving a a $15.00 meal 3 times a week from eating out (and cooking at home instead) can save you in the long run [think 15.00 x3 = $75.00 a week x4 weeks equals $300.00. You save $300.00 each month for a year and you have pocketed an extra $3600 a year!) 

Are there any other strategies to make extra money?

I’ve done my fair share of side hustles to make some extra money to save; I’ve made an extra $1300 with doing odd jobs and freelance writing in one week before. Once you find your hustle, you can definitely use it to your advantage. 

You can make extra money with any of these strategies, many of which I use:

  1. Freelance writing
  2. Selling your own clothes (Poshmark, Etsy, etc)
  3. Odd jobs on Craigslist
  4. Virtual Assistant
  5. Personal Shopper 
  6. Fiverr is a good place to start looking for odd jobs as well.
  7. Sell your closet on Poshmark

Saving can be daunting, but the first thing to do is start small and build from there; even if you’re putting aside $20.00 a month, any saving is better than no saving. Your future, retired self will love you for starting early😃