Last time, I shared my news of quitting my job that was affecting my well-being and then five tips on what I do to stay focused and motivated through this period of transition. All of these tips apply to anyone who was laid off, quit, or furloughed from their positions.
One thing that has kept me afloat is having an emergency fund. You may be wondering what that means. A savings account? Kind of. A fund for emergencies only? Close. An emergency fund is a type of savings account (outside of an actual savings account) you keep on hand for emergencies such as sudden unemployment, car repairs, medical bills that resulted from spur of the moment visits, and so on. Based on Dave Ramsey’s baby steps, you and I should have an emergency fund of at least $1,000 to start. This is his baby step number one and one I really took to heart. Of course, $1,000 is not enough for us to live on if something happens, but it’s a start.
How many of us live paycheck to paycheck? This was me. In reality, this is many of us. Start with $1,000 and you’ll feel yourself become more at peace knowing you have cash on hand to handle emergencies. Over time, you should continue to build your emergency fund until it equals at least three months of all living expenses. Adjust accordingly based on your needs and responsibilities. I’ve dipped into my emergency fund while I’m unemployed to pay a few bills and it has made me even more thankful to have a cushion to fall back on.
Do you currently have an emergency fund? If not, what is preventing you from starting one?
-Maria